No. The revealed preferences of voters is smaller government and higher private sector growth. What is needed is a higher inflation target, and/or for the central bank to permanently retire government debt. Unfortunately, the Fed has been feckless (along with macroeconomists of both the salt and freshwater variety). The Fed has not even achieved it's stated target. The May jobs report was awful - The Fed should not have started raising rates. 3% inflation is not the apocalypse. The combination of too-low inflation and a trade deficit has been caustic, and is why we are seeing a rebellion against trade and immigration. A few more reports like the May jobs report, Yellen will be dealing with President Trump.

Puerto Rico is significantly more important than Greece for the U.S. Bond markets. It is hard to predict how PR will evolve. Any contagion from PR that impacts the liquidity of some states (and municipalities) with large debt and deficit burdens will have some direct economic consequences in the US. It could force a pullback in state & local spending or tax hikes (less likely going into 2016 elections) - either one would impact GDP growth. It could squeeze a few munis at the margin and cause some additional defaults. A lot depends on how orderly PR is - a state or territory defaulting is uncharted waters, and whether creditors see PR paving the way for other states (IL, NJ) with oversize obligations to relieve themselves. Greece will get perhaps more headlines, but PR will have a more direct effect.

"In contrast, injections of capital—cash, capital goods, or livestock—seem to stimulate self-employment and raise long term earning potential, often when partnered with low-cost complementary interventions. Such capital-centric programs, alongside cash-for-work, may be the most effective tools for putting people to work and boosting incomes in poor and fragile states." Yeah, cash for work ... wait don't we have a name for that? Personally I think instead of these jobs training programs in Baltimore, we should give people livestock, along with a "cash for work" program that tears down all these vacant houses and gives the livestock a place to graze.

"The range between high and low interest rate forecasts at end 2016 allows the possibility the Fed hikes at every meeting starting next month, or leaves every meeting unchanged, until end 2016." 1- It is not unusual to see a wide dispersion among corporate forecasts too. Predictions are hard, especially about the future. 2 - I think that the dispersion among the forecasts is useful information: It shows a high degree of uncertainty amongst people who have a lot of information. Reasonable people can disagree where inflation is headed, and they can disagree a lot more now post-financial-crisis. Look at how many central banks made policy errors and hiked rates too early in the last few years. What is the "natural" (non-inflationary) rate of unemployment? Statistically, 5%+/- 1% is a reasonable range given historical data. But the difference between 4% and 6% is *huge*. One implies hike rates now! now! now!, the other implies wait until late in 2016. 3- Once we get to a point where the Fed is hiking rates, I expect the forecast dispersion to collapse. The real question is not the dispersion in the forecasts, but how will they manage the risk. If they overshoot unemployment (let it slide to 4.0% when the natural rate is 4.5%), they risk a bump in inflation. If they stop it at 5% when we could go to 4% or 3.5%, then they risk a much slower recovery (and a recession). I personally see far less cost of a mild bump in inflation, but based on their own internal forecasts, they seem unwilling to allow PCE to run above 2%, and that suggests earlier hikes and a slower recovery.

Here we are in June with no hike, when many people thought that June was a near-lock (in spite of the decline in Energy prices). We are T-15 days from a Grexit, I doubt we will see the full fallout by Sept. The housing market will not be normal for another 2 years, still, and higher mortgage rates are having an effect. Hard to see a hike before Dec. With PCE inflation running less than 2% for 2015, 2016, and 2016 (and we've been under it for what- 35 months now) - that will be 6 years without inflation printing above 2%. At what point can we be intellectually honest and admit that 2% is not really the target, and the economy is moving along at exactly the pace the Fed is comfortable with?

Academic economists suffer from the "which is the reason" problem. The correct answer is: All of the above (except maybe #7). There is not a single reason. If you are smart, when you negotiate (say for example, a car) you generally negotiate for the *whole package cost/benefit* (including fees and the trade in), not just for a subset. That way they do not nickel and dime you on the trade in, or dealer fees (this technique is also known as "nibbling" - asking for "small stuff" at the end - a good negotiator can get 3-5% more value by nibbling). You don't want to negotiate higher wages and then have (even a vocal minority) pissed that the company took away the wages in the form of higher deductibles. Also, keep in mind, *by law, if its not written in the contract, the company can do whatever they want*. That means, work rules, seniority, and hiring/firing decisions, and disciplinary rules are often there too. The union will often also bargain for the *number of positions* and what to do with vacancies (I can cite some examples). There are about 3000 ways a company can screw you if you *only* put wages in the contract. Put wages and benefits in the contract, they screw you on hiring/firing and eliminate positions. Put wages, benefits, hiring/firing in the contract, they screw you on work rules. Even if what goes into the contract is "no change in the current benefits/work rules/etc." Sometimes the contract will even say, "when you open another plant you must do xxx" or "you may not move work to South Carolina or other right to work state." In reality, union negotiators are trying to please multiple constituencies: some who overestimate the benefits, some who are older and value them more, others who appreciate the tax subsidies, and others who just want higher wages. Union bosses are also monopolists who favor a compressed wage structure, their goal is to maximize the benefits to workers. The other benefit by the way is that unions negotiate for the same health care to be carried over in retirement (whereas in many cases, corporate health care ends at retirement and you have to sign up for Medicare). I see the same issue in the minimum wage literature, economists puzzle over *which way* employers react to an increase in the minimum wage - redistribute schedules, cut non-wage benefits, use technology, cut costs elsewhere, lay people off, etc. It is rarely the case that there is only one reason employers (unions, groups of people) do something, or even that one reason dominates. There is probably an analogue of the Coase Theorem in here - all costs/benefits in a group are internalized. Typically people in charge have to satisfy multiple constituencies at once, even if each of them in itself is a minority.

re: my above comment, Here is a bill from last year: https://www.govtrack.us/congress/bills/113/hr1174 also to amend the Fed mandate. Chances of being passed: 1%. Chances of making it out of committee: 5%. I think that is optimistic. Here is the updated text of this years bill: https://www.govtrack.us/congress/bills/113/hr5018 5% chance of being enacted. I think that's optimistic. Only 3% of bills from this committee get enacted and this bill has only 2 (relatively minor ranking) sponsors.

"Did I miss the American critics [of a legislative Taylor Rule]? Is this a Brit thing?" Snooze ... Practically anybody can file a bill and get a hearing in the house during the summer. I doubt most people have even heard of the two house members that introduced this. Remember, you need effectively 60 Senators to get bills through the Senate. The odds of this legislation being passed are 0.00001%. My take: this is not a serious proposal, more like a "resume building exercise" to please some conservative groups (note the witness list is Cato, Mercatus, etc.) http://financialservices.house.gov/calendar/eventsingle.aspx?EventID=386842 If this were a serious proposal, you would see Yellen, the Treasury Secretary, etc. as witnesses. . It does not even have an actual bill # (HR ____). I see this a lot discussing bills with brits, Canadians, a Europeans in general. We do not have a parliamentary system in the US, which means that out of the thousands of bills practically any House or Senate member can introduce and get a hearing on, only a tiny % will ever make it through. Congress critters introduce bills to say they "fought for" something. Even bills for which there is a *bipartisan consensus* are nearly impossible to get through, esp in an election year. I could give loads of examples of bills that would get 57 votes in the Senate, a majority in the House, but wont make it. A few years ago for example we had house hearings for the Fed to adopt inflation targeting. You would be surprised what would get 57 votes but that wont get passed. I doubt you will see a lot of serious analysis in the US until its a serious proposal (by proxy: you will see senior Senate members champion it, and/or you'll see Fed Chair and senior White House executives testify).

This is obvious to anyone who has kids and has lived in a major city. Once you have kids, you move to where the schools are good. IF you have the means to do so. Unfortunately, many people in the city are trapped in bad schools. Baltimore has the highest proportion of ineffective teachers in MD, yet no one ever gets fired. Middle and upper class families will always have a choice which neighborhood to move into. You can see this is the declining population in Baltimore and the increasing pop of the suburbs. Plentiful unskilled factory labor used to mask this problem because you could get a decent job in the factory, steel mill, etc. Now that education is necessary for a job, the cracks in the public school system and antiquated rules are pretty apparent.

That Forbes article says the median net worth of people over 55 is 179,400, and the median net worth 65+ is $206,700. Why on earth would you exclude home equity in assets? If my home is paid off, as it should be at 65, I can live on significantly less and don't need other financial assets. The census and Fed consumer survey data contradicts your claim. It says that people over 55 have significant net worth and control most household assets. People over 65 have a mean value of interest earning assets and stocks/bonds of nearly 2 mil. People 55-64 have half that, and younger people even less. Since the census data contradicts your claim, the burden of proof is on you to show the data is flawed. By the way, who exactly are these puppeteers controlling your vote and your mind in the voting booth?

yes, a wealth of information from the census that shows that 50+ age group owns 75% of assets, as one would expect from simple demographics.

Domhoff has not "shown" anything. It's a story. Disprove me, show me the age demographic.

you are confusing wealth and income. I checked the census data and 50+ year olds have significantly higher net worth and asset ownership. The graph shows *wealth*. Simple demographics explains most of this.

well, people over 50 own about 75% of financial assets, and they are about 15-20% of the population. Not evil, just normal per the lifecycle model of savings.

The progressives passed laws in CA, NY, MD, and other states that were very unfriendly to gun rights, and the only "message" - an empirical fact - is that they do not intend to stop with the measures passed in CO. Moreover, voters know that the homicide rate in CO, and Denver, is lower than in NYC or in Oakland. People are not willing to give up rights unless there is a real benefit, and there is NO empirical benefit. Stop and frisk, gun restrictions, they have little to no impact on public safety. People know it, so why should they have to choose or give up something for no benefit?

they could try to directly monetize some govt debt, kill two birds with one stone.

which one of those four animals in the photo is the invasive species?

indeed, I left out a lot of examples. WWI and WWI were also partly financed through seigniorage, er, i mean inflation. besides redistribution, tax + debt finance is the only way to be sure that govt spending does not exceed the productive capacity of the economy.

"If you follow Ip's analysis through to its logical conclusion, then why should the Treasury issue debt at all? " Presumably because of the redistributive consequences. Under "normal" circumstances when issuing a coin is inflationary, then an inflation tax would have undesirable redistributive consequences as compared to debt (which imply future taxation). Low inflation + taxes => the government is trying to engineer a redistribution that would not happen through inflation alone, or at least a redistribution that is hampered by inflation. If we dropped this illusion that Social Security is "funded" (current workers pay the benefits of current retirees) then what would dropping payroll taxes and funding entitlement programs through seigniorage look like? What if we dropped all taxes except a sales tax equal to inflation and used the revenue to redistribute income? interesting topics. oh, and the USA *has* resorted to seigniorage to pay debts... the revolutionary war was paid through seigniorage.

no, there is another factor which i have direct experience with: taxes. Take the example of friend A, who works at a small start-up service based business. Friend A works very hard and travels a lot to build the business. When the time comes to get paid, the company, which would rather plow cash back into the business, defers the "bonus" and instead pays her in securities with a very low tax basis, whose gains will eventually be taxed at capital gains or dividend rates. There are many ways tax-avoidance scholars can effectively game the tax code to pay compensation as dividends and capital gains to lower the tax bill (any wonder "compensation share" dropped precipitously after the Bush tax cuts on dividends etc.). If I start a consulting company, I can reclassify my wages as "revenues," deduct all sorts of things (and avoid a bunch of payroll taxes) and then dividend out some of the "profits" after a suitable amount of time. Small businesses account for a significant fraction of gdp in the US, most are service based with little capital, and if you look into it you will find a lot of entrepreneurs getting "compensated" for their hard work in tax-favorable ways.

I dunno about "pent-up" inflation. Inflation is not like steam where pressure builds up. Ultimately, any price level increase will be proportional to the amount of debt monetized - assuming they are at full employment. But I suspect not despite the official statistics and (real) wage rigidity and initial disbelief in any new target will reduce the impact of debt monetezation on inflation. If anything is pent up, its the frustration that the "bitter lessons learned from the long economic and financial history in Japan" is that deflation stinks and the BOJ has not learned this lesson, so they deserve to be threatened with loss of independence. An authority as powerful as the central bank deserves political and democratic accountability, in a democracy, regardless of what some 1980s models that justify independence say. Ultimately, adoption of a 2-3% inflation target with a commensurate kick-start through some debt monetezation would probably not result in "pent-up" inflation, just 2-3% inflation consistent with target. If the floodgates open, its because the politicians let them open, not because the laws of macro-economics dictate it. But Japan has such a cautious culture that I doubt this would happen. Not only do I think they will revise the target and increase stimulus, but I hope it does, to show the developed world how to escape a liquidity trap (which Sumner and Friedman would just argue is a bad-policy trap).

Are these the same guys who thought Romney was going to win by a landslide? I would say this fits the definition of cognitive dissonance, except that these hawks don't seem to be confronted by at any reality whatsoever.

"feels more like a continuation of the slow and steady pace of the past two years. " the difference being that this time around we have open ended monetary policy with active discussions about holding steady until unemployment is below 7% or so, the state and local fiscal crunch is receding, while the housing market is showing signs of life. This should mean that monetary policy has significantly more traction than in the last few years. As for the end of year fiscal cliff, its a tempest in a teapot. just like last years debt ceiling brinkmanship, politicians are not going strangle their constituencies. They may wait until jan when the new house is sworn in and make the law retroactive, but one thing you can count on in DC is some goodie bags to reward people who helped with the election.

Bullard is also ignoring the well-established term premium and tax issues in TIPS that the Cleveland Fed Series attempts to adjust for with their regression. Honestly, let him cry wolf repeatedly as far as i am concerned. Lets get him a Bloomberg interview alongside Peter Schiff. The more times he repeats it the better - and the less likely people are to listen when he speaks the next time since the aforementioned hyperinflation has not materialized.

well, high inflation is the same as high taxes. I think all this tells me is the obvious - taxes have to be raised in some form and if there is no political will to raise direct taxes then the govt resorts to inflation. Probably the good combination is low inflation *and a surplus* with the economy at full employment. The only time i recall having that in the US is the late 90s.