Where Are You?

I’m teaching “Macroeconomic Policy” for upper level undergrads this semester. Obviously, the interpretation and suggested conduct of policy depends on how you view the world, which is hard to contextualize simply. But I think annotating this graph works great — and you can ask yourself — “Where am I?” (The “You are here” addresses my students…)

Notes: Intellectual geneology of economics; blue indicates Modern Monetary Theory school. Source: Coy, Peter, Katia Dimitrieva, and Matthew Boesler. “A Beginner’s Guide to Modern Monetary Theory.” Bloomberg. March 21, 2019.

I’ve marked in red where the course is (textbook Blanchard) located. Green text denotes where politicians have aligned themselves.

Addendum: A lot of recent policy talk in non-academic circles has centered on “Modern Monetary Theory”. I find the discussions mostly incomprehensible, but if you are interested in a paleo-Keynesian interpretation, here’s a set of notes.

122 thoughts on “Where Are You?

  1. Moses Herzog

    Honestly, I always thought of Paul Ryan as more of a “supply sider”, so that one is interesting.

    In actuality it doesn’t matter, as Ryan just blathers anything that he thinks makes him appear to be a technocrat.

    1. macroduck

      So, yeah, it may be misleading to give a pol like Ryan a defined location on a graphic like this. He’s too slippery.

      Which raises a pedagogical possibility. Students, having seen this example, could be assigned the task of locating other public figures on this chart. Public figures active today should be a requirement, but extra credit for historic figures.

      Points off for placing a public figure where that figure would like to be placed when the record says otherwise. Paul Ryan would like to be placed nearer to Reagan, but that asterisk says Ryan doesn’t legitimately belong anywhere.

    1. pgl

      “Why do people not universally share this joy of scientific discovery? Probably because the language nature speaks is mathematics – one that most people are not fluent in.”

      Yea we do realize you still struggle with 2 + 2 = ???

    2. baffling

      “After about ten minutes, I’d say, “Nevermind.”
      bruce hall, this is why you should not be in any conversation on global warming. an inability and unwillingness to understand the physics.

        1. 2slugbaits

          Menzie If the chart is only about linkages to monetary theory, then Ramsey wouldn’t belong, although in that case David Laidler probably should be included. But if it’s supposed to be about macro in a larger sense, then I would include Ramsey. For example the first couple of chapters in Romer’s macro textbook cover growth theory with Solow and Ramsey in order to establish some of the equations used in the remaining chapters. My understanding is that a lot of DSGE and OLG models assume Ramsey-Cass-Koopmans dynamics.

  2. 2slugbaits

    Fifty years ago most politicians probably fell close to the Samuelson/Hicks/Tobin box. Looks like intellectual regress to Austrians and supply side nonsense.

    Way back when I was in high school we used Samuelson’s textbook, which suggests that while it may not be good enough for today’s upper level undergrad econ majors, it’s probably more than adequate for the general public. As to the fascination with Hayek among many conservatives, my sense is that most of those who claim to admire Austrian economics don’t actually know very much about Austrian economics per se, but are attracted to the political ideology that goes with it.

    1. pgl

      I used Samuelson for the freshman class. The intermediate macro class relied on William Branson’s 1972 text which was really great for its day.

    1. pgl

      Anything that starts with praising Mises and Hayek should be ignored especially when it writes this garbage:

      What they hate – Paul Krugman, the Federal Reserve, “Keynesians” and anyone who advocates for government intervention in markets.

      And you wonder why we call you Bruce no relationship to Robert Hall. Go take you daily dose of bleach.

      1. noneconomist

        Among the most vehement attacks on Reaganomics, as I recall, were those from the Mises Institute.

        1. Moses Herzog

          A lot of “libertarians” in Mises—meaning—very cowardly people who are actually Republicans, but when you call them out on Republicans’ hypocrisy they jump into their steel reinforced cement wall storm shelter and holler out “Oh, I’m not Republican, I’m Libertarian.” Which is supposed to squash any criticism. It’s the political conversation version of a college campus “safe space”.

          “Libertarian”= cowardly Republican who doesn’t want to be called out on Republican hypocrisies.

    2. macroduck

      Yet another misuse of Smith’s “invisible hand”. But then almost every effort to invoke the invisible hand gets it wrong, so no surprise.

      1. Steven Kopits

        As my professor Jadish Bhagwati used of say of governance in India: “The Invisible Hand — it is nowhere to be seen!”

  3. Moses Herzog

    Wonder where would Schumpeter fit on this diagram?? And….. is it true Schumpeter said that even as a man who liked to put on an energy infused show for his students that “an old man wearing leather pants in the classroom was taking things too far”??

      1. Moses Herzog

        That sounds about right. Although I hate most Austrian school folks, and I have to confess a certain affection for Schumpeter.

  4. Moses Herzog

    For whatever it’s worth, I like the choice of Lloyd Austin. I think it should almost be (I said almost) a prerequisite that the Secretary of Defense should be a combat veteran. Although I think intermittently you can go outside of that to retain the precedent of civilian leadership control over the military. But here I think it’s a good thing. And I’ll tell you another thing. Austin Lloyd strikes me as much more of a listener than Flournoy. So I feel much better now about the military leadership. It sure makes sleeping at night easier as we count down the days to inauguration.

    1. Moses Herzog

      *Lloyd Austin, excuse me, don’t you hate people with two first names?? No, I mean I am very happy with this choice. There’s others I would have preferred, but this is a solid choice, and I don’t think it deserves any complaining about. You just want a “solid” choice with someone who has judgement. That’s enough. As much as I’d enjoy complaining, you really can’t demand Utopia.

  5. Barkley Rosser

    Interesting figure. Generally not too unreasonable. A few oddities would be putting Greenspan in with Friedman as a Monearist. As it was he was once a follower of Ayn Rand, but both as an adviser to Pres. Ford and then on the Fed I see little adherence to anything remotely resembling hard core monetarism. Heck, his predecessor Paul Volcker was more of a monetarist than Greenspan, with his monetarist esperiment 79-82. It was under Greenspan that supposedly the Fed adopted something like the Taylor Rule in the mid-80s that lasted until sometime after 2000.

    This is also pretty fussy, but Menzie, given that you are located at what was the most important home of the Institutionalists in the US a bit odd to put up a figure like this with such a weird list of Institutionalists. Ayres OK, but Dillard and Foster, forget it. Should have been Ely or Commons, both based at UW-Madison, or more recently somebody like Geoff Hodgson or even a New Institutionaist like Oliver Williamson, although he never did anything related to macro or monetary.

    1. Menzie Chinn Post author

      Barkley Rosser: I must confess, my knowledge of the history of economic thought is incomplete, and I have not really assimilated the history of UW economics, and the institutionalists. I’m also too lazy to try to make up my own schematic. Only 24 hours in a day…

      1. Barkley Rosser

        Well, as I noted I missed seeing Commons in the box with Mitchell, so I was off on that. However, I know you have been in the John R. Commons room in Sewell Hall, although I guess it is not functioning as it used to. Yes, UW-Madison was an important center of Institutionalist economics. That tradition held on longer over in Ag Econ, with maybe Dan Bromley, now emeritus and finally stepped aside as editor of Land Economics, being arguably the last of the breed there.

        1. Barkley Rosser

          So, Menzie, I shall bore most here with a bit more on the history of the UW-Madison econ dept, noting especially the switch in dominance from the institutionalists to the econometricians (your crowd, :-)), which began during the 50s and was pretty well completed by the mid-60s or so as Art Goldberger became the dominant figure in the dept. The last figure in the dept itself to battle for the institutinalists against Big Art and his allies was the late Jack Barbash, whom you might have known, although maybe dead before you got there, a labor economist. In 1969 i graded for his Capitalism and Socialism course, an opening for my later interest in comparative economics, a course he inherited from Selig Perlman, also a labor eonomist, and the first Jewish member of the UW faculty. Ironically the second Jewish member of the UW faculty was Milton Friedman in 1940-41 after he left NBER with him teaching statistics. He was not rehired with it long alleged, especially by Selig Perlman’s son, Mark, that anti-Semitism was behind this, with institutionalist Walter Morton a key driver of this. Later, when he was Dept. Chair, my major prof, Gene Smolensky would guilt trip Walter over this into giving the dept a lot of money, which is why there is (or was?) the Walter Morton Conference room on the 7th floor just down from the John R. Commons club.

          Indeed the alternative explanation for what happened to Friedman, now a great embarrassment to the dept, involved an early round of the institutionalist vs econometricians power struggle that Goldberger (Jewish) would later win. While almost certainly anti-Semitism was a sub-text the surface argument was against Friedman teaching stats, with Morton rallying the anti-mathy institutionalists against this with this focusing on not rehiring Friedman, with them winning that battle, if not the longer war (Oh, Jack Barbash was also Jewish, although Bromley is not). Friedman himself reportedly was more aware of this issue than the anti-Semitism at the time. I also note that at that time Friedman had not yet fully formed his strongly pro-laissez faire views, although they were beginning to form, with that coming later after WW II when he went to Chicago, so that potential ideological issue was not an issue in his employment at UW.

          I have noted it here before, but I shall again, how it came to be that UW econ was able to attract such top flight econometrician starting in the 50s such as Arnold Zellner, who soon left for Chicago, Art Goldberger (no longer among the living), and later Chuck Manski, now at Northwestern, among others (including Menzie himself as well). The econometricians were especially attracted because of the presence of George Box in the Statistics dept, as well as some of his coauthors such as Tsiao. Box in turn had come because he was the son-in-law of the important biometrician, Ronald Fisher, he of the 95% confidence level among other things, but with Fisher’s close associate in the statistical analysis of population genetics there, Sewall Wright, who died in 1988 in his 90s. He arrived at UW in 1951, and Box came soon after. As it was, I got to know Wright personally, who discovered the endogeneity problem in econometrics while estimating ag supply and demand curves for the USDA in the 1920s. I happen to own his personal copy of his over 60 page study for the USDA of the corn-hog cycle.

          Regarding the institutionalist holdovers in the ag econ dept there, another important one was Dick Bishop, who was the first person to realize that the problem for managing common property resources was not strictly about ownership, but about control of access, with this sort of close attention to details of how property law and management operate fully in the Wisconsin branch of Old Institutionalism as developed by Commons. Bishop influenced Dan Bromley, whom I already mentioned, who edited Land Economics for over 40 years, and starting in the late 1980s Bromley also wrote on this problem, including a book on Managing Common Property Resources. Of course, Lin Ostrom got much more attention for her 1990 book on this, which won her the Nobel Prize. As it was, I note that Dan was one of the few journal editors in econ who published papers by Lin before she got her Nobel. I was one of the few others who did so when I was editing JEBO and was glad to see her win it.

          Dan was an outside reader in the end on my diss and gave me a hard time about it, altough later did publish one of the chapters in Land Economiocs and a later paper by me. I continue to have good relations with him in his retirement, with him still writing books.

          1. Menzie Chinn Post author

            Barkley Rosser: Very interesting. I would not claim to be an econometrician in the Economics Department, as kind as it is of you to list me as such — I am much too applied for that characterization. However, one of my key thesis advisers and coauthors was Richard Meese (of Meese-Rogoff), who received his PhD at UW Madison under the supervision of John Geweke (who *is* an econometrician, now at that *other* UW, in Seattle).

          2. Barkley Rosser

            I do recognize, Menzie, that you teach macro and international macro rather than econometrics, per se. Indeed, John Geweke was another of the several outstanding econometricians who were drawn to the dept by Art Goldberger and the others he attracted, which also included Hansen and also Gary Chamberlain, whom I have just heard is leaving Harvard, which he went to from UW-Madison. But that tradition has also attracted high quality practicing econometricians like you as well.

            Just to annoy annoy Moses, but also to tie up loose ends about intellectual descent regarding me, given also that you wrote about your own history, I must note that both Milton Friedman and I intellectually descend from the Chicago branch of institutionalism, even though I personally dealt with the Wisconsin tradition. So Friedman’s major prof was Arthur Burns whose major prof was Wesley Clair Mitchell, the founder of the NBER, whose major prof was Thorstein Veblen of Chicago. My major prof was Gene Smolensky at UW whose major prof at U. of Penn was Richard Easterlin, with Dick still alive and active in his 90s, the father of happiness economics, although he did finally retire from USC a couple of years ago, with his major prof Simon Kuznets who did his Nobel Prize-winning work on developing the National Income and Product Accounts while working at the NBER for his major prof, Wesley Clair Mitchell, yes, the student of Thorstein Veblen. That makes me and Milton Friedman intellectually first cousins twice removed.

          3. Barkley Rosser

            Oooops, correction needed. What Sewall Wright discovered in the 1920s was the identification problem, not the endogeneity problem. Shame on me, the ghosts of Wright and Art Goldberger will never forgive this manifestation of incipient early stage dementia on my part.

          4. Barkley Rosser

            One more tidbit to all this history of the UW econ dept and its connection to larger policy issues and schools of thought. So going back to that embarrassing time in 1940-41 when the dept failed to rehire Milton Friedman out of some combination of his being Jewish and also apparently an econometrician, with apparently somewhat anti-Semitic and institutionalist Walter Morton leading the charge against Friedman, I might note the dept was different in some other ways not now understood. For starters, there was not yet a separate School of College of Business, whereas today that college is large and located in the large and modern Grainger Hall on University Ave. near Park Street. Also, the then combined dept was on the top floors of Sterling Hall, now occupied by the physics dept, the building bombed in 1970 due to also containing the reesearch center run by my late old man, with a physics grad student dying in that attack.

            Anyway, after the dept split in the 1950s (I think) the econ dept would move into the new Social Science building, noe Sewell Hall, where it remains. The School of Business moved to the building across the street, which was long known as the Commerce building, although it is now Ingraham Hall and contains Womens’ Studies and some other depts, with Biz now at Grainger. Ingraham was a former dean.

            Walter Morton was the one person who maintained a joint appointment in both, although now again the dept has at least one prominent person, Randy Wright, who does so. Morton was in fact an expert on banking and for decaxdes taiught the undergrad Money and Bankiing course that was required for many biz majors. He was actually a Progressive, sort of, despite his unpleasant views on some things, and he remained around until into the 70s, being one of Jack Barbash’s backers during the later stages of the fight in the dept between the institutionalist and the econometricians. His course was very practically oriented, and by the 70s there were a lot of people running banks all over the state who had gone through that course.

            As it is, the key battleground was on the policy orientation of the dept, which it has since Ely supported Workmens’ Compl and public finane specialist Harold Groves helped set up the national Social Security system following both things done in Wisconsin as well as the German model, not surprising given the link between the Wisconsin institutionalists and the German Historical School through Ely. Groves would retire in 1969. His tudents included Walter Heller and Robert Lampmann, the latter becoming a dept member. He would serve with Heller on the CEA in the early mid-60s, there when LBJ launched the War on Poverty, which gave him the opportunity to get fed funding to set up the Institute for Research on Poverty mentioned previousl by JohnH.

            So that insitute became a major focus of the policy orientation, which followed traditions of public service at UW dating to its founding in 1848 when Wis became a state, and which the LaFollette School continues, which Menzie is associated with. I would say that the ultimate victory in the dept of the econometricians came when it became clear that research grants for the Poverty Institute were more likely to be forthcoming when they involved credible econometric testing of what was being studied. As it was, the sort of eocnometrics Goldberger did especially suited this, structural equations models with lots of serious ways to approavh their problems, including both the identification and endogeneity problems constantly cropping up in those studies, which also had a propensity to get tangled up with each other.

            A final odd note is that William Sewell, for whom the builiding is now named, was a famous and progressive sociologist who served for a period of time as Chancellor, meaning the top person on campus. He it was who called in the police during the October, 1967 Dow chemical protests, which became violent, first time I ever got tear gassed. They happened between the then Commerce building and the then Social Science building because it was in Commerce that job-seeking students were getting interviewed by Dow Chemical, Co., then viewed as complicit in bad stuff in Vietnam. Protesters tried to block the interviews on the fitrst floor of Commerce, but the police came and it spilled outside and got ugly with a lot of people got injured. David Maraniss wrote an account of that demo in his book, They Marched into Sunlight.

  6. Moses Herzog

    Folks, Menzie discourages YT videos. And I get it, it gets time consuming for any blog host and Menzie has to worry about schmucks like me who put up stuff with vulgarity (although 98% of the time I think I warned him when stuff was in it, there were no “tricks” there). So I’m just gonna tell you~~Jimmy Dore has one of his better videos up, Keyword search “CNN silences Criticisms of Biden’s cabinet choices” on YT’s search function. This is the type stuff that shows you what “real” “liberal media bias” is?? Where are these liberal members of the media?? I’m kinda having a hard time finding them. Maybe they got bought and paid for like Neera Tanden’s “CAP”??? But that’s really hard to believe CNN “journalism” could be “bought and paid for”since they get all their money from Fortune 500 companies and private equity firms advertising, right??

  7. Moses Herzog

    Menzie, I think #6 can be misleading. The implication always is the MMT proponents are for “endless” fiscal spending or “endless” “G”. That’s not what they are prescribing.

    1. Moses Herzog

      i.e. “can” and “should”~~~different things. You can drive 100 mph on a college campus, but do you do it at lunch time in the middle of fall semester, or on Spring Break while campus police are doing a shift change over??

      1. Moses Herzog

        My apologies, bad eyes, #5. Isn’t there a phrase you hear economists use, “pushing on a string”?? (although I think that one is more related to monetary policy than fiscal) My meaning is, Just because MMT are saying you can do more spending, doesn’t mean they are prescribing endless spending. And this is what their detractors are always implying.

  8. Moses Herzog

    I think Menzie has been one of the leaders in the Economics profession on the topic of diversity. While not being overly brash about it or “in your face”, carrying it maybe in the more stereotypical Asian way of quiet example, and speaking more about it, when the topic came up in a more “organic” kind of way. So I thought Professor Chinn would appreciate these links, and they seem at least semi-appropriate in this thread:


    I hope that any of Menzie’s students reading this, know they have a diversity “ally” in Professor Chinn.

  9. ltr


    Paul Krugman @paulkrugman

    Good post — but I’d argue that DSGE models (if you don’t know what that means, consider yourself lucky) never had real policy influence. Policymakers who thought about theory at all were generally closet Keynesians


    The new macro: “Give people money”
    This time around, theory has taken a back seat

    7:49 AM · Dec 8, 2020

    1. pgl

      Dynamic Stochastic General Equalibrium (DSGE) or Static Deterministic Partial Disequalibrium?! That was a Larry Summers joke.

    2. macroduck

      What looms in the background of Noah’s piece, never explicitly named, is banks. Policy makers, faced with a gigantic financial shock in 2008, fell back on thinking which the shock itself should have discredited – credit is the magic elixir to cure economic ills. Bail out banks, not households.

      That thinking revealed the corruption which had seeped into economics. Finance as handmaiden was gone, replaced by finance as puppet master. Not just in reality, but also in the minds of policy thinkers. Bankers and financiers held on to the money they had gotten by blowing bubbles and nacent populists became Tea Party voters.

      “Give people money” isn’t new. It is the prescription that policy makers and Tea Party voters alike rejected a decade ago. In hindsight, it was the right prescription then. Time has allowed those who were famously wrong a decade ago to abandon failed assumptions but has not allowed time to acquire new ones. No competing intellectual regime needed to kill off the old one – that’s how bad the old regime was. Thomas Kuhn meets Alvin Toddler.

      1. Moses Herzog

        Krugman and others have argued: (not saying I 100% agree, but I tend to lean towards the same view)

        mathematics = complexity = getting published = more mathematics = unnecessary complexity = no impact on policy

        It’s my take (full disclosure, from a semi math challenged schmuck) that some people are losing the ability to rationalize things out, to “juxtapose” things out in their mind~~~ IS-LM is useful to work those muscles in your mind. Is IS-LM the “be all end all”?? NO. But I do think it gives more policy answers than DSGE. And I also think when 2/3rds+ of American politicians don’t even pay attention to what IS-LM and Macro 101 is telling us, what the hell good is DSGE going to do?? ATM—not a whole hell of a lot.

      2. Moses Herzog

        I think the better argument would be to show a paper where DSGE had an impact on a policy issues, not saying “Oh well, there’s lots of papers using it”. Lots of people could be blowing on a pinwheel right now, but I don’t think it’s going to affect the wind.

      3. Dr. Dysmalist

        Could Krugman have been referring to fiscal policy only when he tweeted that DSGEs had no effect on policy? I took it as being in the context of policy made by politicians, which removes monetary policy from the discussion.

        1. Moses Herzog

          @ Dr Dysmalist
          What you’re saying is slightly confusing to me, wasn’t it supposed to be monetary policy that was removed from politics?? Although one could argue that started to change when “W” Bush and Greenspan started their romantic courtship of each other. Then we had Jerome Powell thinking that it was cute and we were all too dumb to notice when rates were moved within a 48 hour period of trade moves:

          “In August, he called the central bank and its chairman “clueless” then in September he called them “boneheads” just before the Fed cut interest rates for the second time this year.”


          One of my bigger problems with Jerome Powell was, at least once (arguably more than that) he changed rates because of bad trade policy. The problem with that is, Jerome was ENABLING those same bad trade policies by loudly signaling to the Orange Abomination in the WH that he was going to play doubles tennis with him on those bad trade policies.

          But this proves what we already knew, outside of MAYBE Yellen’s exit door move on Wells Fargo, the Fed Res has shown zero interest in their regulatory function, and is only interested in playing babysitter to large commercial banks.

          1. Dr. Dysmalist


            I took it that Krugman was referring to policy made by politicians in the executive and legislative branches, which is fiscal policy only. After the executive appoints the Fed governors, no elected politician has any overt, i.e. statutory, influence on monetary policy. Therefore, monetary policy is removed from Krugman’s discussion, or context. Of course, any politician can bloviate stupidly in the traditional press or over social media on any subject they desire, as Tweetler proves endlessly.

            As for “enabling” poor trade policy, the Fed has a mandate to keep inflation within an acceptable range, with my word “acceptable” carrying a heavy burden there. If the Fed believes higher inflation is incipient, it must act, regardless of whether the inflation is due to an exogenous shock or to a boneheadedly childish “President” throwing around tariffs like Mardi Gras beads. They have no remit to do nothing and shout, “it’s not us, it’s the Moron-in-Chief doing this!” As far as I know, nothing stops them from stating “We are forced to take this action because of the effects of idiotic trade policy,” but most if not all recent Fed governors would consider that to be a grievous breach of decorum.

          2. Moses Herzog

            @ Dr. Dysmalist
            I think we are 85%+ largely in agreement on this. But two things I would like to add. That I think (from a personal view, maybe not good for public diplomacy) that the Fed Chair is well within his rights to make it clear to the public, and “spell it out” verbally in public speeches when the President is meddling. And (again from my own personal view) it would have behooved Chairman Powell to take that “out into the open” and openly attack the trumpian meddling (decorum or not).

            The other thing I would like to say here, and I have to tread careful as I am walking on the fragile ground of trying to interpret another’s thoughts. I am wondering if at the core of what Krugman is saying, is not just “facile politicians haven’t used anything that has been illuminated by DSGE in enacted public policy” but rather Krugman is saying “The progression and advances gained from DSGE papers/research has been so small and non-contributive to economic theory that there is nothing for politicians to derive or extract from it~~even if they were ‘so inclined’ ” ???

      4. Barkley Rosser


        What has been widely reported, and I think both Menzie and Jim would agree with it, is that when the FOMC meets to decide policy for the US Fed, they tend to look at the outputs from three different kinds of macro models. One is a DSGE type on, albeit of the modified New Keynesian variety with various essentially ad hoc bells and whistles in it. Another is a retreaded structural equations model that is essentially an update also with a lot of ad hoc bells and whistles of an ISLM type model, but with many more equations and sub-parts, which has been in the Fed basement forever getting modified. Then there is an atheoretical purely time-series one derived from a Vector AutoRegressive (VAR) formulation, although more complicated, which, reportedly, often beats the other two in forecasting, especially when things are just going along with the past driving the future simplistically. The policymakers view all three with a degree of skepticism and also listen seriouslyi to gossip from business leaders who have communicated with their regional Fed bank presidents.

        So, it is not obvious that there is a particular policy proposal or recommendation that has come out of DSGE models that central bankers have followed strongly because of it coming from them, with indeed such models having a bias towards suggesting doing as little as possible aside from avoiding inflation. But they do continue to play a role in policy discussions, for better or for worse.

    1. Moses Herzog

      @ JohnH
      This part I have to admit I find to be pretty entertaining, in a morbid/jaded way, which unfortunately is how my mind works sometimes:
      “The problem is that specious official predictions of rising interest rates are entirely normal! FS include a very useful chart (Figure 15) showing the persistent – and ongoing! – forecasting failure of the Congressional Budget Office with respect to interest rates. CBO has persistently overestimated future interest rates for decades. FS note that the errors have been growing over time, but they do not point to the obvious reason, immediately visible in their chart. For at least 15 and possible 20 years, as the ten-year bond rate marched steadily downward, CBO never changed its long-term interest-rate forecast! The forecast remained stuck, for no rational reason, at a return to 6 percent. (CBO has since lowered their projections.) This ridiculous forecast was a main source of hyperventilating Washington and media predictions of debt-service explosions and debt debacles for many years.”

      It reminds of when Ashoka Modi was discussing the ECB inflation projections, which they managed to get wrong over a period of YEARS. ~~~and guess which way the ECB got it wrong?? Speaking to the general blog audience here~~ If the Jeopardy theme song plays out and you can’t get this one correct, please swear to us all you’ll never get a job related to public policy or “public administration”. Please, for the love of God, promise us.

      1. JohnH

        I seem to recall that the Fed had quite the run of bad forecasts, too—over optimistic growth and overconfidence in reaching their inflation target. I attributed them to an institutionalised optimism bias.

        It reminded of sales forecasts I used to see..

    2. pgl

      That was a long winded attack on the following paper:


      Try reading this paper before you decide Furman and Summers are idiots. Or maybe you shouldn’t as I seriously doubt you understand a bit of this discussion.

      But hey – praise Cameron’s fiscal austerity in the middle of the Great Recession but attack Summers on an economic issue that he gets but you do not.

      1. JohnH

        Funny! You can’t even ask a question, and pgl has a hissy fit!

        Summers has had a long career at the Center of power and quite the reputation, so it would be interesting to know where he fits, particularly given his outsized influence.

        I was wondering how pgl the Democratic partisan hack would rise to Summers’ defence…and here you have it: ignore the question, deflect blame, and cast it elsewhere.

        Par for the course.

        1. Moses Herzog

          @ JohnH
          It’s enough to make you think our resident fraud “feminist” pgl (contributor on “FemaleNoSpeak” blog) has forgotten about the phone call Lawrence Summers made to Brooksley Born. And you know when the supreme “misogynist” of Econbrowser Uncle Moses remembers it quite clearly, that’s an embarrassing moment for the Sophia Loren fan.

          Or maybe the phone call between Summers and Born was “so complex” that we should “seriously doubt pgl understands a bit of this discussion”.

    3. pgl

      “The fact that the Washington Post depicted an article by Jason Furman and Larry Summers pumping for deficit spending as evidence of an “intellectual revolution” shows how bad a grasp most commentators have on economics. As the post by Jamie Galbraith describes long form, the Furman/Summers argument was incoherent and relied on the “loanable funds theory” (loans come from existing savings and are therefore limited; interest rates serve to balance supply and demand) that was debunked by Keynes nearly 100 years ago.”

      Jamie Galbraith knows better than this misleading BS. After all – even Keynes recognized the validity of the argument in a full employment economy. Yes when the economy is far below full employment, we have a different story. This is standard macroeconomics so shame on the young Galbraith for muddling this. Then again back in 2016 his praise of that stupid Gerald Friedman paper tried to deny there was a full employment constraint.

      1. JohnH

        Actually, pgl, maybe it’s you who should read the article. The quote you cited was not by Jaime Galbraith but by Yves Smith.

      2. Moses Herzog

        “back in 2016 …….. paper tried to deny there was a full employment constraint.”

        The words of a true corporate Democrat. “Full employment constraint in 2016”. If I was Neera Tanden I’d make pgl my chief gopher. W-e-e-e-e-e-e-ll…….. she wouldn’t call you chief gopher. Would you feel super important if Ms. Tanden titled you “Chief Liaison to Bain Capital” and promised you free use of whatever gym the current mayor of NYC is using?? Let us know your demands, because you are perfect for the job.

          1. Moses Herzog

            @ pgl
            I see you and Barkley Junior studied under the same substitute debate teacher in grade school. Do you realize roughly 25% of your comments on this blog are one sentence blurts ending in “garbage!!!” or “gibberish!!!!”. Then you’ve got another 50% of your comments where you self-manufacture what your opponent is saying and then attack what you self-manufactured. It’s kind of cute. You’re giving lots of people who read this blog training on what it’s like having a 15-year old daughter. Only you’re so angry at everyone it might be more like being the parent of a teenager right after she failed her 3rd driver’s license driving exam.

        1. pgl

          Summers notes the contribution to economic thought made by Friedman. Of course you could not be bothered to read this either. DUH!

        2. Menzie Chinn Post author

          JohnH: Well, remember Friedman won the Nobel for contributions to consumption theory, monetary policy, economic history. To the extent that (1) we think the permanent income hypothesis is of interest, (2) real interest rates were unnecessarily high during the Great Depression, I’d say we’re all a little Friedman-ite these days.

          1. pgl

            And in 1948 (I think) he wrote a very strong case for floating exchange rates. Something I suspect Judy Shelton never read.

          2. Moses Herzog

            I nearly hate Milton Friedman, because I think overall he did more damage than good. He gave heart to a lot of illiterates with misguided notions out there. But you know the one thing I will give Friedman credit for?? His work in the U.S. Treasury Department during WW2. And it’s fascinating to note, he didn’t seem to be so anti government revenue at that particular stage. Wonder why?? (special note to tweedle dee in NYC and tweedle dum in Harrisonburg VA , that’s a rhetorical question)

        3. Barkley Rosser

          Of course Milton Friedman approvingly quoted Richard Nixon at one point as saying “We are all Keynesians now.” So there you go: Friedmanites are really Keynesians, as people in some more heterodox schools of thought would agree with while dismissing both of them, such as Marxists and Austrians.

          1. pgl

            Friedman grew up during the Depression so he has always known we can deviate from full employment. Those that think he was stuck in the Robert Lucas fairy tale did know him that well.

        4. Dr. Dysmalist

          An opinion column from 2006, pre-Great Recession? A recession that caused every competent macroeconomist to reevaluate their theory and practice? And has written about it often over the last decade? I struggle mightily to find the relevance to today, except to the extent that Larry Summers is yet another in a long and rapidly expanding list of people whom you consider enemies.

  10. Raymond L. Love

    There should be another line connecting the “debt-doesn’t-matter-any-more” Republicans to the MMTers. That line could zig and zag and also connect to the Trump/McConnel crew showing their disregard for debt as well (pre-election-only exception). And if Bernie represents the far left, lol (Chomsky has classified Bernie as an FDR Democrat), then, the “Credit Card Senator” who is our next president, and very much complicit in the current wealth shift and amnesty for ‘Banksters’ policies, well, he is perhaps worthy of mention too. Thusly, while risking the charts charming simplicity, a line for stooges, or for the ‘anything to succeed’ category, that line could connect all of the politicians back to something Adam Smith simply mentioned ( “vile insects” maybe?). Then too, it may be better to have separate charts for economists and politicians. (In all fairness to Menzie he did say up front that this is : “hard to contextualize simply. “)

    1. pgl

      Very well done. But I think the people who put this chart together wanted to exclude Klass Klowns like Cheney, Kudlow, Moore, and Luskin.

      1. macroduck

        Seems so. Suggests applying local liquid minerals to local solid minerals. Dandy, but for what market?

    1. macroduck

      The big jobs deficit going into Biden’s first term may be his biggest advantage in running for a second one – or a first Harris term.

  11. tom michl

    You might suggest your students read Kelton’s book. Its well written. Most of us in the heterodox world think MMT gets a lot wrong but they also make some sensible points drawn from Abba Lerner and the Good Old Keynesian Economics traditions. Your re-statement of MMT is not very helpful–you should read the Mitchell, Wray, Watts text. They don’t believe most of the stuff you ascribe to them.

    1. Moses Herzog

      Let’s be fair, it’s tough to get this right because there’s a lot of “shaded area” there rather than a clear borderline. And MMT’ers themselves haven’t always been the greatest at communicating some ideas. I think this will improve over time. Not everything Keynes said “went over well” at Bretton Woods. And also I think the external cynicism to MMT is healthy, as it sharpens MMT’ers blade.

      1. pgl

        My problem with the MMT crowd is how they can write 10 pages proving 2 + 2 = 4 as if the rest of us did not already know this. Giant waste of space.

        1. Moses Herzog

          @ pgl
          What you fail to realize, maybe because you have a tinge of Barkley style narcissism is, messages are not just tailored for one single person. They are made to get across to the largest audience possible, especially in the burgeoning period of a new economic ideology.

          And what makes your comment doubly baffling is, even some pretty intelligent people aren’t getting some core concepts of it, that are relatively easy to understand.

          1. pgl

            How does babbling for 10 pages on something that is both obvious and well accepted by other economists getting a message across to a larger audience? You remind me of the fool who can listen to a lawyer for an hour and think this bombastic turd has a point.

        2. Dr. Dysmalist


          Along that line, I seem to recall that Krugman wrote a column, or maybe a blog post, a few (meaning less than 10) years ago that concluded that MMT amounts to a restatement of conventional macro policy when applied in the current, meaning post-Great Recession, economic environment in the US. He also wrote (again, IIRC) that MMT would likely be less relevant in a different macro environment.

          It made a lot of sense to me, and I reminded myself that Krugman knows a lot more about macro than I do, whether open or closed economy, as does our esteemed host. I am open to further elucidation from any and all more knowledgeable sources.

  12. Moses Herzog


    Strange, I don’t hear ANY Republicans discussing voter suppression here:

    Or this:

    Funny how Missouri’s Josh Hawley and other Republicans are very selective about what makes them cry after losing. Maybe Josh Hawley feels it’s “unfair” poker when he can’t steal Aces from the poker deck.

    “The California Republican Party is setting up their own ballot drop boxes. Party leaders disclosed they have put them in three counties with closely contested U.S. House races: Orange, Fresno and Los Angeles. But they say they are being used in additional counties as well but won’t identify them. Party spokesman Hector Barajas said several dozen boxes are in use and more soon could be set up.. Party officials would not say how many votes have been collected with the boxes. Some of the drop boxes appeared to be filing cabinets with a taped piece of paper labeling them “official ballot drop boxes.” They were at churches, county Republican Party headquarters and some businesses.”


  13. Barkley Rosser

    Another odd line that is missing is one from the box that has Mitchell and Commons in it (I see that I missed Commons there, looking for him in the Institutionalist box where he is not located, so my previous comment about him missing was obviously misguided). This missing line would go from the box to the Monetarist box with Friedman in it. The misslng link, who might be in either the starting box or the Monetarist box would be Arthur Burns, who was Mitchell’s student and right hand man at the NBER, which Mitchell founded, and a major developer of the Mitchell approach to business cycles, which tended to emphasize data and looking at patterns rather than theory or econometric analysis. In any case, Burns was the major prof of Friedman, who I believe briefly worked at NBER in the late 30s under Burns and Mitchell when he was a grad student. It is my understanding that Friedman’s permanent income hypothesis was originally formed while there, which was cited in his Nobel Prize, although I may be wrong about that. Just to link all this further with monetary policy, Burns was Fed Chair from 1970 to 1978,being the first Fed Chair to have to testify regularly to Congress about Fed policy, where he initiated the approach of giving murky answers, which he would further shroud in clouds of smoke from his pipe, over his famously octagonal glasses.

    Regarding having Mitchell and Commons in the same box, that is fine, but I note that they represented in effect the two main strands of US Institutionalist economics. One was the strand that came out from Veblen, who was long based at Chicago ironically enough given his generally leftish ideological tilt and where the Chicago School would end up later. But Mitchell was his student, as was Clarence Ayres, who is listed in the Institutionalist box. Ayres would found the Old Institutionalist org, the Association for Evolutionary Economics (AFEE), which is still around and publishes the Journal of Economic Issues.

    Commons was at Wisconsin and the student of Richard Ely, who founded the American Economic Association (AEA), which long remained dominated by Institutionalists until the neoclassical synthesis crowd led by Paul Samuelson took it over in the 1950s. Ely himself, now being cancelled due to his advocacy of eugenics, got his PhD in Germany from professors advocating the German Historical School approach, which is a clear predecessor to the sort of Institutionalism one finds in Commons. Ely first was at Johns Hopkins, where he introduced the German system of higher ed and PhDs into the US higher ed system more broadly. At Wiscsonsin his advocacy of workers’ compensation led the state legislature to demand his firing, but the Board of Regents supported him with a statement that included a line now viewed as a symbol of the university and placed on the front of Bascom Hall, approximately, “No matter how much others may seek to trammel the search for truth, here at the University of Wisconsin we shall allow the sifting and winnowing by which alone the truth shall be discovered” (the part of that I am most sure about is the “sifting and winnowing” line, which is its most famous part).

    1. Barkley Rosser

      Oh, I forgot to note that Mitchell and Burns and the original NBER were based at Columbia, where Friedman got his PhD, although Mitchell got his PhD at Chicago under Veblen.

    2. Moses Herzog

      It’s been a zillion years since I read that stuff, but my understanding was that Greenspan was an Arthur Burns crony. But I will admit I’m a bit hazy on it, because it’s been easily over 10 years since I read anything on that. I certainly don’t think that relationship with Burns hurt him getting his Fed Chair appointment.

      1. Barkley Rosser

        While Greenspan’s degrees were all from NYU, apparently he studied with Burns at Columbia in the early 50s briefly. So you are right about that, Moses.

    1. baffling

      susan rice got a domestic policy position. until democrats control the senate, she will be limited to positions without a big confirmation process. another issue of electability i guess.

        1. baffling

          her position changes if democrats win both georgia senate runoff elections. don’t think they will, but it will be interesting. neither gop candidate has helped themselves recently. in fact, both have shown themselves to be real idiots. does not seem to hamper gop support, however.

          1. Moses Herzog

            @ baffling
            I’m not saying that you are wrong. That is certainly in the cards~~but at the same time I have to think you are more of an optimist on this (a duty change) than I am. I think she probably stays in that same post (let’s gauge 2 years minimum??), even if the Georgia votes go Democrats way. I’m still happy Rice got this job, as I think she is capable to execute her duties here well.

            That being said, I have to confess to being a little bit of a hypocrite maybe here, because if it was someone else with the same job background as Rice, I would probably complain she’s not suitable for this specific job. But I am such a huge fan of hers and in her innate abilities and potential, I just find myself happy she got a job worthy of her stature. But maybe I am being a little hypocritical on this. It’s hard to step outside of one’s self and look accurately.

            She’s more suitable for national security or civilian leader of defense, so…… It also seems like that’s where her natural interests lie, but I have seen her get very emotional when she discusses Syria, and I think that one took some emotional burden on her, so maybe a domestic related role is exactly what she wants at this juncture.

          2. baffling

            ” I just find myself happy she got a job worthy of her stature. ”
            i never had any doubt she would serve an important role in the administration. i don’t think biden could wait for the runoff to find her a position-and the outcome is iffy anyways. i also don’t think she is interested in going through political confirmation processes. she wants to be an analyst and execute the actions, rather than play politics. she wants to be where the action is, not finessing egos for votes. and biden feels our biggest problems are domestic, not foreign, at this time. if biden changes his view, i think she changes position along with it.

  14. ltr

    December 8, 2020



    Cases   ( 15,591,709)
    Deaths   ( 293,398)


    Cases   ( 9,735,975)
    Deaths   ( 141,398)


    Cases   ( 2,309,621)
    Deaths   ( 56,352)


    Cases   ( 1,750,241)
    Deaths   ( 62,033)


    Cases   ( 1,218,325)
    Deaths   ( 20,161)


    Cases   ( 1,182,249)
    Deaths   ( 110,074)


    Cases   ( 428,469)
    Deaths   ( 12,851)


    Cases   ( 86,646)
    Deaths   ( 4,634)

  15. ltr

    December 8, 2020

    Coronavirus   (Deaths per million)

    UK   ( 912)
    US   ( 884)
    France   ( 862)
    Mexico   ( 850)

    Canada   ( 339)
    Germany   ( 240)
    India   ( 102)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 9.3%, 3.5% and 2.4% for Mexico, the United Kingdom and France respectively.

  16. ltr


    December 9, 2020

    Chinese mainland reports 15 new COVID-19 cases

    The Chinese mainland recorded 15 new COVID-19 cases on Tuesday, including 4 locally transmitted cases in southwest China’s Sichuan Province and 11 from overseas, the National Health Commission announced on Wednesday.

    One new asymptomatic COVID-19 case was recorded, while 210 asymptomatic patients remain under medical observation. No COVID-19 deaths were reported on Tuesday, while 11 patients were discharged from hospitals.

    The total number of confirmed COVID-19 cases reached 86,661, with 4,634 deaths as of Tuesday.

    Chinese mainland new imported cases


    Chinese mainland new asymptomatic cases


    [ There has been no coronavirus death on the Chinese mainland since the beginning of May.  Since the beginning of June there have been 7 limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained.  Symptomatic and asymptomatic cases are all contact traced and quarantined.

    Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Cold-chain imported food products are all checked and tracked through distribution.  The flow of imported cases to China is low, but has been persistent.

    There are now 284 active coronavirus cases in all on the Chinese mainland, 5 of which cases are classed as serious or critical. ]

  17. Bob Flood

    All modern macro flows through Friedman. He debunked the constant MPC, the basis of Keynesian thought. He debunked the static Phillips curve – another K underpinning and he did a great Monetary history project.

    1. Barkley Rosser


      I grant that Monetary History of the US with Anna Schwarz is an excellent work. The rest of what you put here has issues.

      So even if you want to argue that “the constant MPC” is “the basis of Keynesian thought,” which is seriously debatable, I note that it has generally been accepted that the early to mid-60s empirical debate between Friedman and Meiselman on the one hand and Hester and some others like Ando and Modigliani on the other over whether the coefficient for the demand for money is more stable than the MPC ended up essentially in a draw, with even a monetarist sympathizer like William Poole arguing that in the 70s. (Yes, Menzie, that would the same Don Hester you would have known at UW before he died.)

      On the matter of the Phillips Curve, maybe that is a “K underpinning,” but it is not an idea found in Keynes’s own work, Phillips not publishing his paper until over a decade after Keynes died, with the crucial paper really identifying it by Samuelson and Solow being published only in 1960 (Phillips famously relating unemployment to the rate of changes of wages, not the inflation rate as Samuelson and Solow redefined it). Of course if one actually reads their paper they always said it could move and warned about that, with Samuelson in his textbook as we got into the 70s spending lots of time talking about it moving. So while Friedman got a lot of attention for making the point, it was not a point of Keynes, and the people who actually invented always said it was not static before Friedman did so in 1968.

      So, Friedman wrote a good history of money, but you could have done better here with your history of macro thought, Bob.

    2. pgl

      “He debunked the constant MPC, the basis of Keynesian thought. He debunked the static Phillips curve – another K underpinning and he did a great Monetary history project.”

      Sorry but this is not quite right. Ando and Modigliani gave us the Life Cycle Model of Consumption and they remained quite Keynesian. Solow and Samuelson had a version of Friedman’s dynamic Phillips curve in the early 1960’s and they certainly were Keynesian.

    3. Barkley Rosser


      There are also the problems that the price level does not follow the money supply, any measure of it, which Friedman himself admitted before he died, and the permanent income hypothesis is not all that solid empirically either. You are right that these were highly influential ideas at various points with Friedman their leading advocate, but neither has held up all that well over time.

      One thing he did call, although he was not alone in doing so, was to advocate floating exchange rates, which have largely been in place since 1973 between the world’s leading currencies, give or take some “management” going on from time to time with some of them.

  18. ltr

    December 8, 2020

    Coronavirus (Deaths per million)

    Belgium ( 1,497)
    Italy ( 1,014)
    Spain ( 998)
    UK ( 912)

    US ( 884)
    France ( 862)
    Mexico ( 850)
    Sweden ( 711)

    Switzerland ( 644)
    Luxembourg ( 585)
    Netherlands ( 570)
    Portugal ( 503)

    Austria ( 443)
    Ireland ( 423)
    Canada ( 339)
    Greece ( 307)

    Germany ( 240)
    Denmark ( 155)
    India ( 102)
    Finland ( 76)

    Norway ( 66)
    Australia ( 35)
    Japan ( 19)
    Korea ( 11)

    China ( 3)

  19. ltr

    Latin American countries have recorded 4 of the 12 and 6 of the 23 highest number of coronavirus cases among all countries. Brazil, Argentina, Colombia, Mexico, Peru and Chile. Mexico, with more than 1 million cases recorded, has the 4th highest number of cases among Latin American countries and the 12th highest number of cases among all countries. Mexico is now the 4th among all countries to have recorded more than 100,000 coronavirus deaths.

    December 8, 2020

    Coronavirus (Deaths per million)

    US ( 884) *

    Brazil ( 836)
    Argentina ( 882)
    Colombia ( 746)

    Mexico ( 850)
    Peru ( 1,097)
    Chile ( 817)

    Ecuador ( 777)
    Bolivia ( 766)

    * Descending number of cases

  20. ltr


    August 11, 2013

    Milton Friedman, Unperson
    By Paul Krugman

    Recently Senator Rand Paul, potential presidential candidate and self-proclaimed expert on monetary issues, sat down for an interview with Bloomberg Businessweek. It didn’t go too well. For example, Mr. Paul talked about America running “a trillion-dollar deficit every year”; actually, the deficit is projected to be only $642 billion in 2013, and it’s falling fast….


    August 12, 2013

    Synthesis Lost
    By Paul Krugman

    A few more notes on the fading of Milton Friedman, which is actually part of a larger problem with economics as practiced for the past few decades.

    1. pgl

      Krugman’s post were a balanced mix of admiration for the professional contributions by Friedman v. how certain right wing politicians tried to hold Friedman up as their guiding light. Paul Ryan in particular had no clue what the economist Friedman happened to contribute.

  21. ltr

    December 9, 2020



    Cases   ( 15,820,042)
    Deaths   ( 296,698)


    Cases   ( 9,762,326)
    Deaths   ( 141,735)


    Cases   ( 2,324,216)
    Deaths   ( 56,648)


    Cases   ( 1,766,819)
    Deaths   ( 62,566)


    Cases   ( 1,242,253)
    Deaths   ( 20,704)


    Cases   ( 1,193,255)
    Deaths   ( 110,874)


    Cases   ( 435,330)
    Deaths   ( 12,983)


    Cases   ( 86,661)
    Deaths   ( 4,634)

  22. ltr

    December 9, 2020

    Coronavirus   (Deaths per million)

    UK   ( 920)
    US   ( 894)
    France   ( 867)
    Mexico   ( 856)

    Canada   ( 343)
    Germany   ( 247)
    India   ( 102)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 9.3%, 3.5% and 2.4% for Mexico, the United Kingdom and France respectively.

  23. ltr


    December 10, 2020

    Chinese mainland reports 12 new COVID-19 cases

    The Chinese mainland recorded 12 new COVID-19 cases on Wednesday, including 1 locally transmitted case in north China’s Inner Mongolia Autonomous Region and 11 from overseas, the National Health Commission announced on Thursday.

    Five new asymptomatic COVID-19 cases were recorded, while 193 asymptomatic patients remain under medical observation. No COVID-19 deaths were reported on Wednesday, while 11 patients were discharged from hospitals.

    The total number of confirmed COVID-19 cases reached 86,673, with 4,634 deaths as of Wednesday.

    Chinese mainland new imported cases


    Chinese mainland new asymptomatic cases


    [ There has been no coronavirus death on the Chinese mainland since the beginning of May.  Since the beginning of June there have been 7 limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained.  Symptomatic and asymptomatic cases are all contact traced and quarantined.

    Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Cold-chain imported food products are all checked and tracked through distribution.  The flow of imported cases to China is low, but has been persistent.

    There are now 285 active coronavirus cases in all on the Chinese mainland, 5 of which cases are classed as serious or critical. ]

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