Reset Your Clock to 2003

The WSJ reports,

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said Tuesday rock-bottom borrowing costs in the bond market are not a positive vote on the economic outlook.

My reaction:

1. This is another echo of 2003-2004, when Fed officials were equally puzzled by low long-term rates. I was even more puzzled than they were back then, and I am even more puzzled than they are now.

2. The conventional wisdom is that the bond markets watch the Fed, because the Fed has magical control over everything. To me, it seems more realistic to have the Fed watching the bond markets for clues about the economy. The Fed is actually powerless to alter the consensual hallucination.

3. I remember when Tyler Cowen described blog readers as like followers of a TV show or comic strip. They have cumulative knowledge of your blog, so that you can refer implicitly to what you have written previously, and they enjoy little inside jokes. Twitter has changed that. Now I have a lot of one-off readers, who leave comments that show that they know absolutely nothing of my previous writing. They have no context for my thinking on macroeconomics, and so they just decide that I am an ignoramus. I have gotten advice from people to make my blog post headlines more Twitter-friendly. In fact, I am reconsidering whether I want to get any traffic at all from Twitter. In the long run, I think I will like what I write more if I ignore the one-off reader population.

QE and Fiscal Offset

Tony Yates writes,

As Summers reportedly put it, while the Fed was engaged in quantitative easing, the Treasury was doing ‘quantitative contraction’. And surely the two arms of government should be better coordinated than that.

Pointer from Mark Thoma. My remarks.

1. Read the rest of his post.

2. Larry Summers is quite late to the party. Some of us have been talking about this issue for years. For example, almost four years ago, James Hamilton wrote,

since 2008, the Treasury has been issuing more long-term debt faster than the Fed has been buying it… What we find in the latest data is that this trend has continued over the last 3 months, even with QE2.

3. Wikipedia defines superstition as

the belief in supernatural causality—that one event causes another without any natural process linking the two events—such as astrology, religion, omens, witchcraft, prophecies, etc

I think that belief in the macroeconomic impact of the Fed can be properly regarded as a superstition. The Fed’s rules and regulations affect the allocation of credit, and it can aid particular banks when they get in trouble. However, its ability to control interest rates and nominal GDP is far less than most economists and investors believe.

Note that, as with the vast majority of my posts, this was written a few days ago and scheduled to be posted at this time. I find that staying away from immediate publication encourages me to evaluate the wisdom of a post using my “future self.”

Being Charitable to those who Disagree

Maria Popova quotes D.C. Dennett on how to argue:

1. You should attempt to re-express your target’s position so clearly, vividly, and fairly that your target says, “Thanks, I wish I’d thought of putting it that way.

2. You should list any points of agreement (especially if they are not matters of general or widespread agreement).

3. You should mention anything you have learned from your target.

4. Only then are you permitted to say so much as a word of rebuttal or criticism.

Intellectually, I think only the first step is important. It is analogous to Bryan Caplan’s ideological Turing test.

New EconTalk Feature

I only recently noticed that an experimental Continuing Conversation feature on EconTalk. It is like a comments section, but with the comments guided by questions from Amy Willis.

My reading of the first two continuing conversations is that they went well. When I started my economics blog, it was called Great Questions of Economics, and I ended every post with a discussion question. I stopped doing that, more out of laziness than anything else.

It would be amusing/humbling to have Willis-style questions after I wrote a blog post. “What was Kling saying when he wrote ____?” It would be even more amusing/humbling to read the answers.

About This Blog

About two months ago, I quit blogging at EconLog. The main reason was that I was right in the middle of trying a start-up that combined two big trends/fads: online education and mobile computing.

The result,, is something that I am using in teaching two high school courses, one on statistics and one on economics. My original vision was to build something that other teachers could use, also. I might very well have had a good idea. Just as computer programming these days relies a great deal today on shared code libraries, with “reinventing the wheel” an awful sin (and I have a hard time giving up sinning), what I was trying to do was create a platform for creating shared libraries for highly interactive simple quizzes. From the beginning, I had doubts about my ability to execute the full concept, and ultimately the doubts won out. I am glad I tried it, because (a) I can use it in my classes and (b) I learned about how computer programming has changed in the past dozen years.

I want to get back to blogging for two reasons. One is to record links and book reviews for my own benefit. A second is to rejoin the blog conversation–I found that I missed participating.

I decided to go with my own blog, rather than return to EconLog, because I want to have total control over the blog content. I want to model a very particular style of discourse, as indicated by the tag line “taking the most charitable view of those who disagree.” In June, I wrote

Suppose we look at writing on issues where people tend to hold strong opinions that fit with their ideology. Such writing can

(a) attempt to open the minds of people on the opposite side as the author
(b) attempt to open minds of people on the same side as the author
(c) attempt to close minds of people on the same side as the author

So, think about it. Wouldn’t you classify most op-eds and blog posts as (c)? Isn’t that sort of pathetic?

My goal is to avoid (c). I will try to keep the posts here free of put-downs, snark, cheap shots, straw-man arguments, and taking the least charitable interpretation of what others say. So, if what you most enjoyed about my past blogging efforts were the put-downs, be prepared for disappointment with this incarnation.