Monthly Archives: March 2012

Cadbury Eggs


When they moved production from New Zealand to the UK and switched from the runny white centers to the thick, frosting-like filling, it got way harder to cook them scrambled.

Cadbury Eggs
Wed, 28 Mar 2012 00:00:00 GMT


A work of fiction for the health policy wonk | The Incidental Economist

A work of fiction for the health policy wonk | The Incidental Economist.

Richard Branson hatches April Fool’s Day plan to journey to the center of the Earth | The Raw Story

Richard Branson hatches April Fool’s Day plan to journey to the center of the Earth | The Raw Story.

Like in Ulysses and the Sirens, John Taylor wants to “tie up the Fed”


From Taylor´s op-ed at the WSJ:

Unfortunately the Fed has returned to its discretionary, unpredictable ways, and the results are not good. Starting in 2003-05, it held interest rates too low for too long and thereby encouraged excessive risk-taking and the housing boom. It then overshot the needed increase in interest rates, which worsened the bust. Now, with inflation and the economy picking up, the Fed is again veering into “too low for too long” territory. Policy indicators suggest the need for higher interest rates, while the Fed signals a zero rate through 2014.

For all these reasons, the Federal Reserve should move to a less interventionist and more rules-based policy of the kind that has worked in the past. With due deliberation, it should make plans to raise the interest rate and develop a credible strategy to reduce its outsized portfolio of Treasurys and mortgage-backed securities.

History shows that reform of the Federal Reserve Act is also needed to incentivize rules-based policy and prevent a return to excessive discretion. The Sound Dollar Act of 2012, a subject of hearings at the Joint Economic Committee this week, has a number of useful provisions. It removes the confusing dual mandate of “maximum employment” and “stable prices,” which was put into the Federal Reserve Act during the interventionist wave of the 1970s. Instead it gives the Federal Reserve a single goal of “long-run price stability.”

Coincidentally, Scott Sumner recently wrote a post entitled: “John Taylor on monetary policy in 2008”.

Between 2008 and 2009 NGDP fell at the fastest pace since the Great Depression.  That suggests that monetary policy was probably too tight in 2008.  Oddly, John Taylor seems to think money was too easy…

The Fed “messed up” the moment it let money supply growth reverse while velocity was falling. At the time that happened the Fed was giving excessive attention to oil (and commodity) prices, just as Taylor does in his 2008 piece!

Below is the illustrative picture. Note that Taylor´s rates “too low for too long” period matches exactly the interval during which NGDP was climbing back to trend. So it seems “low rates” was exactly what was required. Under his namesake rule, which indicated a much higher FF rate, it´s unlikely that would have occurred.

Like in Ulysses and the Sirens, John Taylor wants to “tie up the Fed”
Marcus Nunes
Fri, 30 Mar 2012 04:46:16 GMT

Initial Claims


It’s So Maddening to Bruce

Public policy should try to make prices of goods and services equal their social cost, especially at the margin.  If production of energy pay its entire social cost in for example environmental degradation, then its output should be taxed to drive the costs to producers to equal the social cost.  Monopolies should be broken up to do  the same thing.  Do our politicians seem to do that?

You be the judge from this recent event:  The Reaction of Washington to Rising Gas Prices.

Here’s what President Obama’s up to:

Obama’s lead pollster and senior strategist Joel Benenson told reporters Thursday that to appeal to voters who believe they’ve been especially hurt during the recession, the president needs to tie Republicans to lucrative benefits for the oil industry, and advocate for tax fairness and new investments in manufacturing and high-tech jobs…Although White House officials conceded early this month that there is no direct and immediate linkage between ending oil company tax subsidies and reducing gasoline prices, the president nonetheless tried to blend company profits, petroleum market speculation, and pump prices into the same populist message.

It seems the main thing the President is up to is trying to accomplish is to divert voter’s ire from himself, by having them believe that’s he trying to avoid profits for big oil, even that will do nothing to help those who buy gas.  There no apparent interest in equating the costs of producing oil with its price.

Tax policy for the oil industry should be to avoid wedges between social and private costs, not to serve some wave of outrage about profits in production of a good.

Are Republicans any better?

Take it away Senator Mitch McConnel (Republican leader in the Senate):

Senate Minority Leader Mitch McConnell, in a statement, denounced the president’s efforts to pass a version of a measure previously defeated by the Senate in 2011. Suggesting the president’s interest in repealing oil company tax breaks was an election-year gambit, the senator said he opposed the bill because it did little to lower $4-a-gallon gas and would instead “raise taxes on energy manufacturers.”

Republicans aren’t interested in letting prices rise if needed to reflect increasing scarcity of oil as an exhaustible resources.  In the end Republicans are not pro-market; they’re pro business.  It’s not good policy.

I’m not familiar with the tax policy of the oil industry that much.  If the tax changes proposed end subsidies for oil production that keep oil prices and product price below their social costs they should be repealed, as the the President has proposed.  If the tax changes proposed drive cost of oil production above or further above the social cost of its production, the Republicans are right and the tax policy should be kept unchanged.  This may be true to the extent that oil tax policy lets costs of oil production be reflected in calculated oil profits.

It does feel like our leaders are using a rational anything like this.

Henderson and Gochenour on “Presidential Greatness”, David Henderson | EconLog | Library of Economics and Liberty

We find that a strong predictor of greatness is the fraction of American lives lost in war during a president’s tenure. We find this predictor to be robust and compare favorably to other predictors used in previous historical research. We discuss potential reasons for this correlation and conclude with a discussion of how historians’ views might affect policy.

via Henderson and Gochenour on "Presidential Greatness", David Henderson | EconLog | Library of Economics and Liberty.

Jane Fonda as Nancy Reagan – Forbes

This is a likely tempest in a teapot that Fox news will stir vigourously I’m sure. This will be bashed as a liberal biased movie.

Seems like maybe it is, John Cusack as Nixon doesn’t seem to work in my mind other than I suspect he really hates Nixon. I’m not sure he’d remember though.

Eisenhower is not cast yet, so I’ll suggest Gene Hackman, though he maybe too intense for likable Ike.

Harry Potter's Snape Could Play Ronnie to Jane Fonda's Nancy Reagan – Forbes.

War? War.

How Conservatives Drove Me Away

via War? War..

Sony Blu-ray Disc Review BDP-BX58… and the future of Sony

Chicago Boyz

via Sony Blu-ray Disc Review BDP-BX58… and the future of Sony.