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Showing blog posts by William E. Spriggs

Trying to Teach Old Dogs New Tricks

On Wednesday, the Federal Reserve's open market committee concluded its two-day meeting to set U.S. monetary policy. In a vote that divided the Board of Governors, appointed by the president and confirmed by the U.S. Senate in an open public process, and the presidents of the regional bank board presidents, chosen by boards dominated by banks within their region, Janet Yellen, chair of the Federal Reserve Board of Governors and the FOMC, announced the FOMC decided to hold steady to its current fed funds rate. The fed funds rate is an overnight interest charge made between banks loaning reserves to each other. If it is higher, the cost of making loans goes up, and that reduces liquidity for the business and consumer sectors. Lower liquidity means less borrowing for business investment or consumer purchases like homes and cars. In turn, that means slower demand, and translates into slower growth for jobs.

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What Monetary Policy Needs Is Fiscal Stimulus

The Kansas City Federal Reserve Regional Bank held its annual research symposium at Grand Teton National Park in Wyoming this week. The focus was on the limits of monetary policy. The challenge faced by central bankers is that since the Great Depression, the world has faced deflationary pressures from overcapacity. Oil prices have plummeted, Chinese steel floods the global markets and workers remained frustrated with low wages and finding full-time work. Central bankers have run into a problem because their primary tool of interest rate policy to stimulate the economy has run into the limit of zero nominal interest rates. At zero, they are essentially giving away money. But investment remains stuck on low. And one way to stir the economy, to prompt inflation that gives the room of rising prices for firms to make profitable investments, isn’t happening.

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Black Lives Matter, at Least Every Four Years for Two Weeks

Image courtesy Wikimedia Commons

The Olympics is a constant exercise in irony and hopefulness for African Americans. Since John Taylor won a gold medal at the 1908 Olympics in London, in the no longer contested medley relay, African Americans have hoped that winning gold for the United States would transform America’s dialogue on race. The hope was it could transform the discourse to see African American Olympians, as all Olympians, as exceptional; and, rather than exceptions to their race, as examples of their race and the families that supported and nurtured their excellence.

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Here’s Some History to Help Understand the Racial Wealth Gap

A company of 4th Regiment U.S. Colored Troops, (USCT) Infantry/Wikimedia

Next month is Black History Month. We will hear stories about black Americans and their successes in this country against the barriers (slavery, Jim Crow, poll tax just to name a few) thrown in their paths. Yet for every success story, there is still the nagging fact that the median net wealth of white households is 12.2 times greater than that of black households.

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The Republican Dilemma

The American public is fed up with Washington politics as usual. It is showing in the strength of the “outsider” candidates on both the Republican and Democratic side of the presidential race so far. But the Republicans are faced with a steeper challenge, because this disaffection is deeply rooted in the stagnant wages and incomes of Americans.

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Economics as Religion

General mass of Indignados in Athens Syntagma, Greece (30 June 2011).

Yesterday and today, the world watches, slacked jawed at the endgame of the Greek government’s debt negotiations. The stakes are higher than many Americans understand. So far, the U.S. financial press has viewed this as isolated to the Eurozone. That is in large part because, having endured the Great Recession, there is a view that things are only bad if they threaten the “too big to fail” American banks that can create systemic risks for the U.S. financial sector. But, that view of the world that only bank stability matters is what is so incredulous.

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What Is the Federal Reserve Doing?

Last week, the U.S. Bureau of Labor Statistics issued its numbers for inflation and for real wage movements. The numbers reflected the weak numbers of the first quarter for economic growth: Zero inflation and zero real wage growth in the past three months. The economy is showing signs that it is fragile. It can be spoofed by international developments that raise the value of the dollar and slow U.S. export growth, or by bad weather—events, the Federal Reserve cannot control or easily predict.

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Something Hard to Understand

Each week, another candidate throws a hat into the ring for the 2016 presidential campaign—a constant reminder that President Barack Obama is at the end of his term. Currently, the president is engaged in a high-stakes battle, twisting the arms of the Democratic Party base and pressuring his close congressional allies, like the Congressional Black Caucus, to help salvage his attempt to hammer through a multination “trade” agreement with Pacific Ocean rim nations. That is simply very hard to understand.

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Our Children Are Our Future. Or Are They?

NextUp photo via Twitter

An “old school” demonstration Friday on Capitol Hill by American college students protested proposed cuts by House Republicans to Pell Grants that help our children afford college. I use the phrase “our children” because it is a well-worn phrase “our children are our future.” House Republicans appear to believe they are not “our children,” but your children; and you had better figure out how to get them educated because they are your problem, not our future. This is carrying the case for individualism to an absurd level.

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