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pj cline
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The article starts by pointing out the current argument that the FED should aim for a higher interest rate. Currently the FED aims for 2%, some economists have argued that this is to low and that the FED should aim higher around 6%. The hope is that by doing this the FED would increase domestic demand and allow nominal rates to rise from their current rate at 0%. Interestingly enough by increasing our inflation rates we will also lower our national debt because each dollar will consequently be worth less and hence be less expensive to pay back. The author also point to the "liquidity trap," I agree with Syed that the author means that banks are not loaning enough money to potential customers. The lending of money is a crucial part to the success of the American economy, which is why the lowering of loaned funds is such a problem. Besides just increasing the inflation rate I believe that the government can offer incentives to banks to do so. Perhaps the government can guarantee certain loans that satisfy a set of criteria that shows that enough of the customers will pay back the loans so that they can still make a profit.
I completely agree with Maddie that our economy will need help in the long run. Although quantitative easing, the ability of the FED to keep interest rates low or buy further financial assets, may help our economy in the short run in the long run it will do nothing. The short-term benefits will run our eventually. Capital investment is the key factor to ensuring long run success. Unfortunately, until we ensure that our economy is doing well presently, before we can not look to the future. To ensure the future financial success of the American economy I hope that Janet Yellen succeeds Ben Bernanke as the chairman of the FED. From there we can look to gains in capital investment. This article also talks about what we discussed in class that the FED can manipulate the interest rate and hence the economy through the buying and selling of U.S treasury bonds. When the FED buys treasury bonds it puts excess cash in the economy which leads to low interest rates. The opposite is true for when the FED sells treasury bonds. Right now the FED is buying bonds with the hope that banks lend out the extra cash. Unfortunately the banks are not loaning it. This may lead to the federal government to have direct injections into the economy, so that the money can actually help jump start the economy. The article refers to them as T-bills and through them the FED is able to help navigate the economy through tough times.
It seems that the decreasing unemployment rate, for people with less than a high school degree, signifies businesses looking for cheap unskilled labor. Any decrease in unemployment is good, but this situation is not ideal. If unskilled laborers are working they are not likely going to school to improve their skill set. In the short-run this is good for the economy, but in the long-run our economy will need skilled laborers to grow. Matt also brings up a good point regarding our nation's unemployment rate. Specifically, that it can be misleading if it only decreases because people stopped looking for jobs, and therefore exit the workforce. Our country needs to create incentives for businesses to bring in more workers. Maybe tax ride offs for businesses who hire a set amount of people? Just an idea obviously, but I believe that people need to look at what the economy should be 10 to 20 years from now. There are no quick fixes we need actual investments that will be stable, like in human capital and education.
Going off what Syed discussed, the author of the article does seem to believe that lack of empathy is developed in the high power social classes. The author points to an experiment where high powered members rarely acknowledged the other lower members of the group. Although this study may be true I believe that a number of confounding variables could have influenced the study. Perhaps as people grow with power so does their amount of responsibilities. This may lead to their inability to show empathy to one factor when they have so many other responsibilities to worry about. Certain individuals are also more charismatic than others which allows them to dominate a discussion. Even with these third variables though there seems to be a correlation between wealth and lack of empathy, especially if you were born into a wealthy environment. If you inherited your wealth you probably never experienced any struggle to pay for basic necessities like food and water. Therefore, richer people struggle to fathom a situation were the resources could not be provided. This is why at times people need a reality check and should experience these conditions so that they can fully understand the hardships of living in it. By doing this perhaps they would better relate to lower class situations and finally have more empathy.
I found it interesting that exercise, caffeine use, and consistent sleep cycle were not predominant factors in determining quality of sleep. According to the blog, it may instead be the level of stress and tension felt by the participant. 24% of participants in the study were deprived of sleep because of stress. The study also found that the people who partook in mindfulness through "taijiquan" found themselves to have a better quality of sleep because of the lack of stress they felt. However, maybe mindfulness should not just be used to improve the quality of sleep. The study also showed that participants who practiced it increased positive energy and relaxation, while simultaneously decreasing tiredness and perceived stress. There seems to be a multitude of reasons to practice mindfulness. With less stress we are able to be more productive and responsive. Positive energy also develops this productivity, while at the same time creating an environment where new ideas can be shared without hesitation. This study furthers my belief in the effectiveness of mindfulness to not only enhance the sleep quality, but to better the productivity of a person.
I think it's important to keep stable leadership in the Fed especially when the economy is so fragile. Ben Bernanke has steadily guided the country out of the worst of the recession, therefore Janet Yellen is the perfect replacement since she has been able to observe Bernanke's actions over the course of the term. The author believes that Janet will not have any political allegiances while she is chair of the Reserve. That idea seems very naive because we almost always align ourselves with those who got us into office. She may not be as influenced as Larry Summers would be by the GOP, but there will definitely be some influence. Either way the author brings up that she will secure the nomination since the President can pocket veto any other candidate, hence Yellen would assume the chair from succeeding measures.
Toggle Commented Sep 25, 2013 on Link from Twitter at Jolly Green General
I agree with Reich's proposal that the economy is not as free as it appears and is instead controlled by our representatives in government. In a utopian society this would work fine, unfortunately that is not the case in America. This is because politicians often frame the economy to benefit those that helped them get elected. This can be seen by the Koch brothers who donated millions of dollars through Super Pacs to the politicians of their choosing. By doing so the billionaire brothers expect to be compensated in some way. Most likely by changing the tax code so that it benefits the ultra wealthy. The statistic that Jacob points out that "95% of the income gains from 2009 to 2012 went to the top 1%" is astounding and testifies to the flawed system that exists in our government. Which is why Superpacs should be not be anonymous as they are now.
Toggle Commented Sep 22, 2013 on Link from Twitter econ 102 at Jolly Green General
I agree with Maddie’s point that there is a link between the economy and politics. Krugman goes on to describe how the success of a politician is linked with the state of the economy. This can be seen with President George H. W. Bush’s campaign for reelection in 1993. Bush was seen as a lock leading up to election, but when the economy started plummeting so did his chances of success. A way to counteract this would be the dead-cat-bounce effect. According to Krugman, a smart politician could depress the economy for the first half of their term so that it would naturally recover the second half. We would hope that no politician would purposeldy do this, however one could argue that President Obama unknowingly walked into this situation in 2008. Obama’s election coincided with the financial crisis of 2008, therefore Obama could have done nothing and watched the economy naturally come back and therefore win the election in 2012. Granted I am oversimplifying the issue since the financial crisis called for immediate action by the government, but I thought the relationship between politics and the economy was an interesting issue to bring up.
Toggle Commented Sep 12, 2013 on Your Textbook Author.... at Jolly Green General via I agree with Maddie’s point that there is a link between the economy and politics. Krugman goes on to describe how the success of a politician is linked with the state of the economy. This can be seen with President George H. W. Bush’s campaign for reelection... Continue reading
Reblogged Sep 11, 2013 at My Blog
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