Or, breaking up the big banks might provide some visceral joy, but it’s not clear to me that solves the key problem of financial fragility in modern capitalist systems.
For an economy with underutilized resources or too low a rate of inflation the traditional prescription for monetary policy is to lower the interest rate. Central banks around the world tried to do that in response to stubbornly weak economies, bringing the overnight interest rate in many countries all the way to zero. But when that didn’t seem to be getting the job done, the Bank of Japan last week decided to go negative, charging banks 0.1% interest for excess reserves. With this step Japan now joins the Euro system, Switzerland, Denmark, and Sweden, all of whom have had negative interest rate policies in place for over a year. Here I describe how negative interest rates work, what they are intended to accomplish, and some of the limitations of using this policy to try to stimulate the economy.
“Gov. Scott Walker is set to sign a bill that would allow people to carry concealed switchblades and knives.”
Update, 2/5 1:45PM Pacific: Title amended to address m4570d0n‘s pedantic comment.
Update, 2/6, 10:30AM Pacific: Reader joe argues per capita figures would be more intuitively accessible. Here is the relevant graph.
Figure 2: 12 month moving average of mass shooting casualties per million; deaths (dark red), wounded (pink). Source: Mother Jones, GunViolenceArchive.org. for January 2016, and author’s calculations.
Note: Mother Jones used a 4 death threshold for definition of mass shooting; I have used that criterion for tabulating January 2016 numbers.
More states are slowing even as the Nation continues to expand. The states that contracted include Wisconsin and Kansas, states pursuing a contractionary fiscal policy. Wisconsin’s level of activity lags that predicted by historical correlations.
The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 0.7% annual rate in the fourth quarter. That’s a bad quarter to be sure, and real GDP is up only 1.8% from a year ago. That’s a weak year judged by the U.S. postwar average of 3.1%, but is not far from the 2.1% annual growth we’ve been averaging since 2009:Q3.