Gerald O’Driscoll explains how the Federal Reserve is bailing out European banks. Click for his insightful piece in the Wall Street Journal.
by Chidem Kurdas
In two substantial New York Review of Books articles, Paul Krugman and Robin Wells offer their views on various explanations of the property bubble and ways to get out of the slump. On the latter front, they advocate aggressive deficit spending by the federal government and quantitative easing by the Federal Reserve— No surprise to anyone who reads Professor Krugman’s writings.
Regarding the causes of the bubble, they favor the “global savings glut” explanation. This view absolves the Federal Reserve from having spiked the punch bowl at the intertwined credit and real estate parties—by keeping interest rates exceptionally low from 2002 to 2005. It is remarkable that Krugman and Wells dismiss the case against the Fed without even bothering to mention the work that argues and presents evidence for the Fed’s pivotal role in causing the crisis—namely, Stanford professor John Taylor’s book and articles, including a Wall Street Journal piece.
Why does this matter? Continue reading
by Sandy Ikeda
I seem to remember a good example of the difference between real time and merely dimensional (“Newtonian”) time, probably in O’Driscoll and Rizzo’s The Economics of Time and Ignorance.
Perhaps someone can find the correct reference. In any case, they observed that you can’t listen to music that is condensed in time. You can’t speed listen to Bartok’s “Concerto for Orchestra” at x10 without losing the music.
Their point was that just as time as duration is indispensible in the appreciation of music, one cannot abstract from real time, and all of its complications, when theorizing about economics without losing something essential. It’s been a long time since I came across that example, wherever it was, but it has always stuck in my mind.
Now, when I studied music I could glance at a sheet of music and get a sense of what it “sounds” like. As I read it closer to real time, however, the time in which it was meant to be played, the more the music was able to emerge from the page. Something essential was lost then the more I abstracted from real time. Continue reading