Thursday, July 3, 2014

No. 000050 Missouri Economic and Political Writers A's and F's

Mr. Charles Munger, America's greatest living Economist, Lawyer, and Businessperson—the more than 50 year partner of Warren Buffett— uses and advocates the use of filters to exclude a great deal of information which he knows will be confusing and obfuscating at best, and often deceptive. Simply put, he counsels against paying any attention to anyone with incentive caused bias. The Psychology of Human Misjudgment

I use a letter grading system, read A's and warn others of F's:

A's in Missouri (only listed are people having a substantial connection to Missouri)

If you are not on this list you made an "F"

Here is the archive of his work.
If the titans of finance had only been paying attention, they would have seen that former Washington University in St. Louis economics Professor Hyman P. Minsky, PhD, had predicted the Great Recession decades before it happened.
Well, at least he predicted the factors that led to it, explains Steven Fazzari, PhD, professor of economics in Arts & Sciences and associate director of the Murray Weidenbaum Center on the Economy, Government, and Public Policy.
The lecture, titled “The Legacy of Hyman Minsky and the Great Recession,” is free and open to the public.
As a young faculty member, Fazzari often heard the occasionally gruff Minsky talk about his Financial Instability Hypothesis. Minsky, who retired from the university in 1990 after 25 years, described his ideas in a book of essays published in 1982 about the Great Depression, Can “It” Happen Again?
His final book in 1986, Stabilizing an Unstable Economy, explored his hypotheses further.
“For most of his career, Minsky was somewhat obscure,” Fazzari says. “People were aware of his work, and some took it seriously, but he was largely out of the mainstream. He was a bit of a voice crying out in the wilderness.”
Minsky theorized that the modern financial system made capitalism inherently unstable, which contrasted with the evolving thinking in mainstream economics during most of his years at the university.
Although Minsky’s ideas were formed by the study of factors that led to the Great Depression, he found elements of financial instability leading up to the recessions of 1980-82 (energy lending), 1990-91 (the savings and loan crisis) and 2001 (the bursting of the tech bubble).
Minsky predicted that the credit cycle goes through five stages before a major downturn occurs: displacement, boom, euphoria, profit taking and panic.

J. Bradford DeLong (Kaufman Foundation, Kansas City)

His best sentences: 
But I, at least, cannot help but interpret the declining intellectual fortunes of Milton Friedman's doctrine over the past generation as in large part a reflection of the fact that the Friedman-Keynes position is unstable: that one either follows today's Republican Party and Prescottian Chicago School and becomes a market fundamentalist and thus for consistency deny that the government can do any good, or one moves toward a comprehensive skepticism of markets without an additional clever technocratic layer of regulation imposed in addition to property, contract, tort, criminal, and clever macroeconomic policy to make Say's Law true in theory even though it is not true in practice.
Why this is the case I do not know. I am trying to think about it...

David Andolfatto (Saint Louis Federal Reserve Bank)

His best sentences:
Now, individuals regularly make deposits and withdrawals of cash into and out of their bank accounts. The net flow of withdrawals minus deposits determines by how currency in circulation grows over time. Banks do not lend out their cash. When a bank makes a loan, it issues a deposit liability that is redeemable for cash on demand. The demand deposit liabilities can be used as a payment instrument (they constitute money, and are counted as part of a broader measure of money supply, e.g., M1). The key observation here is that the way currency enters the economy is through the net withdrawal activity of bank customers--it has nothing to dow with banks lending out their reserves.
Alright, so why is understanding all this important? Well, for one thing, it is an accurate description of the way money and banking actually works (as opposed to the traditional "money multiplier" story that is commonly told in undergraduate textbooks). It is the right place to start when thinking of policy questions.
In terms of thinking about the inflation risk associated with the size of the Fed's balance sheet, it guides us away from examining how bank lending (the money multiplier) may react to various shocks. Banks can try to lend out their reserves all they want (create new loans). But if the public is satisfied with their currency holdings, any money injected into the system in this manner would have no effect on bank sector reserves. Since it is bank customers that determine how much cash is withdrawn from reserves, we should instead think about the type of shocks that may potentially alter this redemption decision.
Ann Marie Marciarille (Associate Professor of Law at the University of Missouri--Kansas City)

Her best sentences:
My recent visit to the Truman Libray has sent me back to reread Harry Truman's proposed Economic Bill of Rights and his November 19, 1945 message to Congress on that proposal You can read the whole text here: The Truman Library and archives are a national treasure.
 The invocation of the national interest in a healthy conscript pool is striking in light of what we know about current deficiencies in the military recruit population. Specifically, I am reminded of the 2010 report "Too Fat to Fight" ( and wonder if our own lack of conscripted military service has served to shield many truths from ourselves, including the truth of our lack of fitness to defend ourselves
F's, total failures who should never be read (except by someone like me tasked with correcting their incentive induced errors).

ShowMe Institute (all the opinions are purchased by Rex Sinquefield the only billionaire with his own PR website)

Stephen Williamson (Saint Louis Federal Reserve). The sole apparent purpose of this blog appears to be to assure that ShowMe never finishes last. Williamson has a great deal of Tea Party style jealously and envy of Paul Krugman. He also believes macro economics is a healthy science. Do not read.