Guest Contribution: “Biden Avoids Mistake of Insufficient Fiscal Stimulus”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy  School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate.

It has been a year since the US and the world went into recession.  Because of its origins in the sudden pandemic, it was possible to reliably discern the advent of the recession before it was reflected in any of the standard economic statistics, which is rare.  (I hope it shocks no one to learn that economists can’t normally predict recessions.)

By the end of the second quarter of 2020, US GDP had fallen 11 %. This record plunge took the US economy from a level that is estimated to have been 1.0% above potential output at the end of 2019, to a level 10 % below potential in mid-2020.  Potential output is the level of GDP that is produced when unemployment is at its so-called natural rate, the capital stock is operating at the capacity for which it was designed, buildings have their normal occupancy rates, etc.

  1. Overheating?

Recently, the situation has changed dramatically.  Now forecasters expect US growth so rapid in 2021 that GDP will reach its pre-pandemic high very soon, and by 2022 will probably be above potential output.  (Recovery is also expected in the world economy, though not as rapid.)  Some economists now warn of US overheating.

This situation is, again, unusual:  It is rare enough for the economy to be 5 per cent above potential, as it last was in 1966; it is virtually unprecedented for such a rapid reversal to be predictable.  Only the US build-up to fight World War II is a possible exception.

It is not just the hoped-for victory of vaccination over the virus that is driving these rosy economic forecasts.  (“Hoped for,” not because of any fault of the vaccines, but rather because they are racing against an unholy alliance of anti-vaxers and mutations of the virus.)

US demand for goods and services is increasing very rapidly for several reasons.  First is pent-up demand. American households saved a good share (estimated at around $ 1 ½ trillion) of the government transfers that the Congress legislated a year ago and they are seen as spending some of it as soon as they can.

Second is the big monetary easing that the Federal Reserve put into place a year ago, including lowering short-term interest rates to zero.  Chairman Jay Powell has repeatedly pledged to leave them there for several years.

The third factor super-charging demand is the recently renewed fiscal relief. President Joe Biden’s $1.9 trillion American Rescue Plan, was passed earlier this month by a Democratic Congress. It came on the heels of $0.9 trillion in outlays legislated in December — as a final major act of the Donald Trump Administration, though he at one point threatened to veto the bill if direct payments were not raised to $2,000 per person.

A fourth boost to demand is planned, in the form of infrastructure investment spending.  Biden says that he will partly pay for this by raising taxes on corporations and the wealthy.  But raising taxes is much harder, politically, than raising spending.

No wonder Fed officials on March 17 sharply raised their projections for 2021 growth, to 6 ½ %.  The OECD did the same this month.

  1. Multiplying multipliers

The basis of the overheating assessments is easy enough that anybody can play, in round numbers.  Let us call the US fiscal expansion $1.9 trillion in 2021.  This is 9% of the total economy.

Keynesian multiplier theory is back in fashion, sufficiently so that one dares to speak its name. The multiplier is thought to be as high as 1.5 under recent conditions, namely, when interest rates are close to zero and inflation is low. (The CPI showed a rise of only 1.7 % from February 2020 to February 2021.)

When the government outlays take the form of income transfers, rather than spending directly on goods and services, only the part of the increase in disposable income that households consume enters the demand stream. They usually save some, as they certainly did in 2020, when a lot of the transfers went to the relatively well-off, who tend to save more than the poor.

So, call the multiplier 1.0.  Multiply that by the 9% of GDP in fiscal stimulus, and one gets a 9% increase in GDP.  At the end of 2020, the economy was an estimated 3% below potential output.  So, a 9% boost would put GDP about 6% (=9%-3%) above potential.  Even if the multiplier is only 0.5, it still puts the economy above estimated potential.

  1. Underestimation of potential output vs. flat Phillips curve

Some economists, most visibly former Treasury Secretary Larry Summers, while supporting the basic idea of Biden’s relief program, have on the basis of such calculations warned that the US economy is likely to overheat next year and that this would likely show up in the form of problematic inflation.  Financial markets have also reacted:  the interest rate on 10-year Treasury bonds has now risen to 1.7 %, up from 0.9% in January.

The counterargument is to point out that we don’t really know the level of potential output.  Maybe it is higher than the estimates.  Some have questioned whether, in retrospect, the economy in 2018-19 was really above potential after all, even though the unemployment rate fell as low as 3 ½ %, which is below conventional estimates of the natural rate of unemployment. Their evidence is that inflation rose very little, reaching only 2.3 % in 2019 in terms of the headline CPI.

It seems to me that the best explanation for the small magnitude of the rise in inflation in the period before the pandemic is less likely to be an underestimation of the level of potential output, and more likely to be what economists call a flat Phillips curve. That is, variation in employment and output has only small effects on wage and price inflation.

The evidence for the relative flatness of this relationship?  Before there was the puzzle of why inflation did not rise more than it did in 2018-19, there was the puzzle of why it did not fall more than it did during 2010-2015, in the aftermath of the Great Recession, when unemployment was coming down only slowly from its 10 % peak.  The explanation that encompasses both periods is that the curve is relatively flat.

The implication: yes, the US economy is likely to be above potential output next year; but, no, inflation is not likely to rise excessively.  For that matter, some rise in inflation is actively desired by the Fed, as part of the recovery effort.  Fed officials project the unemployment rate to fall to 3 ½ % by the end of 2023. Vice-Chair Rich Clarida on March 25 said the corresponding increase in inflation is consistent with the adoption of a new policy framework, Average Inflation Targeting, that the Fed adopted in August 2020.

Even Olivier Blanchard, who estimates that the fiscal boost will push unemployment as low as 1 ½ %, also estimates that the resulting rise in inflation would be just 0.5 percentage points in the short run.  (He worries about the longer run if the expansion continues.)

Other downsides?

To be sure there are other possible downsides to so much stimulus, besides inflation.
(1) The national debt is now at the highest level, relative to the economy, since 1945: the debt/GDP ratio is to reach well over 100% by the end of 2021, according to CBO.  It appears sustainable, provided interest rates remain very low.  But interest rates will rise sooner or later.  Ultimately, though debt dynamics constrain spending everywhere, the US can get away with things that other countries can’t, due to the dollar’s exorbitant privilege.

(2) Let’s say the Fed does succeed in keeping interest rates low. Many observers worry that such money-financed expansion causes asset bubbles and wealth inequality.

(3) The trade deficit is bound to increase, as some of the spending falls on imports.  In truth, this wouldn’t be so bad for the economy: the trade deficit would be a safety valve alleviating overheating.  But, politically, it could exacerbate protectionism.

(4) If “the sky’s the limit” on spending, some of the money could be wasted.  Fortunately, Biden is familiar with the possible pitfalls.  He has targeted much of the spending to such priority needs as fighting the pandemic and cutting child poverty and has taken credible steps to bolster accountability.

The “mistake of 2009”

The Biden people are clearly trying to make sure that the country doesn’t “repeat the mistake of 2009,” when Barack Obama’s $800 billion stimulus – though big by historical standards – was too little and too short-lived to do the job fully.   True, the Great Recession ended almost as soon as the legislation was put into place.  But the subsequent recovery was too slow.

It is not clear that the limited size of the 2009 American Recovery and Reinvestment Act was really a mistake of the Obama administration (unless, perhaps, the mistake was Obama’s desire for a modicum of bipartisanship). Its officials would argue that they got the biggest stimulus through Congress that was politically possible, given Republican opposition.

It may be off-limits to say it was the public who made a mistake.  But voters reflexively blamed the weakness of the 2009-10 recovery on the party that held the White House.  In the mid-term elections of November 2010, they put the Republicans back in charge of the House of Representatives, where they were in a position to block further measures to boost the economy.

The country did indeed make a mistake in 2009-10 in curtailing the size and duration of the fiscal expansion. Regardless of where precisely one locates that mistake, it is sensible of Biden to make sure it doesn’t happen again in 2021-22.

 This post written by Jeffrey Frankel.

47 thoughts on “Guest Contribution: “Biden Avoids Mistake of Insufficient Fiscal Stimulus”

  1. Baffling

    For those making the inflation argument, i would like to know what rate of inflation they expect, and exactly how that will be detrimental. I simply do not see levels of inflation occurring high enough to be a problem. 4-6% inflation is not problematic. 8 or 10% may be a problem, but i do not see a path to those values, especially for an extended period of time. We will have higher inflation, no doubt, i just do not see it as a problem. Just an obstacle to work around.

    1. Moses Herzog

      I think the Suez thing throws a monkey wrench into inflation forecasts. Still, if Egypt lets the U.S. Navy help in problem solving, I don’t see how this impacts that much. Fool that I am, I believe the U.S. Navy might find a expeditious solution.

    2. Moses Herzog

      As a humorous side note, ZH blog was trying to promote the idea of another toilet paper shortage. While not out of the question, I put the odds on that around 15%.

      1. Barkley Rosser

        Given that the French builders of the Suez Canal were followers of the utopian socialist, Henri de Saint-Simon, I have titled my Econospeak post on this matter “Are Utopian Socialists Responsible For A Possible Upcoming Toilet Paper Shortage?” 🙂

        1. pgl

          Revealed: The Final Stage of Socialism is a Shortage of Toilet Paper!

          Venezuela has been going through a prolonged shortage of all manner of consumer goods for several years. Especially toilet paper, which is so scarce that black-market rates are more than five times as high as supermarket prices, according to Fusion, and hotels are telling guests to bring their own toilet paper and soap.

          1. Barkley Rosser

            Do note, please, that the degree of actual “socialsm” in Venezuela has been exaggerated. Most of the means of production remain privately owned, although the oil sector was already mostly state-owned prior to Chavez and well run before he came to power and installed a bunch of corrupt and incompetent cronies.

            The problems in Venezuela look more like that, due to a lot of corrupt incompetence than actual socialism. But of course they manage to skew the story by describing themselves as “socialist,” probably the worst advertisement for that term around.

  2. Paul Mathis

    I hate to contradict Prof. Frankel because his analysis is excellent in general, but there are several crucial data points where he is wrong. According to FRED, annualized CPI inflation after 2011 peaked in 2018 at 2.4% then fell in 2019 to 1.8%. With inflation at these levels, there is no case that the economy was operating above potential in 2019. Only by cherry picking one month in 2019 (December @ 2.3%) can anyone argue otherwise.

    I think Prof. Frankel is also wrong about this statement: “It is not clear that the limited size of the 2009 American Recovery and Reinvestment Act was really a mistake of the Obama administration (unless, perhaps, the mistake was Obama’s desire for a modicum of bipartisanship). ”

    Pres. Obama was a fiscal conservative. In April 2009, before the Great Recession had even hit bottom and as nearly 700,000 jobs were being lost that month alone—with over a million more jobs to be lost until the unemployment rate finally peaked six months later—President Obama was telling Americans that the federal government had to “tighten its belt” and impose “fiscal discipline” to end the economic crisis:
    “We came into office facing a budget deficit of $1.3 trillion for this year alone, and the cost of confronting our economic crisis is high. . . But we can’t settle for a future of rising deficits and debt that our children can’t pay. All across America, families are tightening their belts and making hard choices. Now, Washington must show that same sense of responsibility.” — President’s Weekly Address, 4/25/09.

    Not only did Pres. Obama invoke the “family finances” fallacy, he also adopted the conservative talking point about “debt that our children can’t pay”. Later on, after he had reduced the deficit 75% during the weakest recovery since WWII, he bragged about his deficit reduction on the White House website.

    Pres. Biden this week criticized Obama for not touting the ARRA as a great accomplishment as Biden did during his recent “victory tour.” Fortunately, Biden has a much better understanding of how the economy functions and does not fear monger about the debt.

    1. JohnH

      Yep…though Democrats tried to place the blame for Obama’s fiscal conservatism entirely on Republicans. Moral of the story: Democrats were entirely capable of shooting themselves in the foot without any help at all. (And proved it.)

      Their apparent epiphany is sudden and recent, so let’s hope they can manage to sustain their progress.

  3. Barkley Rosser

    Looks pretty reasonable, although I would go further and say that if indeed we have a flat Phillips Curve that pretty much means that the idea of the “natural rate of employment” (or unemployment) is basically meaningless baloney, so the sooner we just stop talking about it, the better.

  4. 2slugbaits

    A few points…

    1. While Jeff Frankel is right about how economists interpret potential GDP, that’s not exactly the definition that falls out of CBO’s methodology for estimating it. For a good discussion on this I recommend Dietrich Vollrath’s blog post on the subject:

    2. As Jeff says, Obama’s mistake in 2009 was in not fully appreciating the evil and mendacity of Mitch McConnell. After all, McConnell openly admitted that he cared more about making Obama a one-term president than he cared about the country. He didn’t even pretend to deny it. Sadly, McConnell is still around.

    3. We shouldn’t worry about the absolute level of inflation. It’s accelerating inflation that is worrisome, not some specific level. Inflation that goes from 2% to 3% to 4% to 5% is much more of a problem than inflation that stays at 6% and doesn’t budge. The only reason for the 2% target is some old research that suggested anything above 2% might trigger accelerating inflation rates. That “research” always struck me as a bit too convenient in the way the conclusion matched the current policy.

    4. It may be off-limits to say it was the public who made a mistake. It’s never off-limits to point out that voters are nitwits. When it comes to economics most voters are economically illiterate and think the macroeconomy is just like a big household. But voters aren’t just nitwits with respect to economics; they’re just as clueless when it comes to military and defense issues.

    5. Should we be worried if nominal interest rates increase but real rates don’t? Won’t nominal tax revenues increase proportionally?

    6. My understanding is that infrastructure spending will be funded via tax hikes. There’s nothing inherently inflationary about increasing contractionary taxes by “X” amount and then exactly offsetting that by increasing expansionary spending by “X” amount. It’s the balanced budget multiplier.

    1. Menzie Chinn Post author

      2slugbaits: Re (1), pretty sure CBO defines potential GDP as output from neoclassical model of the economy, hence use of production function approach. This in turn is consistent with AD-AS model where by Okun’s law, potential GDP is level at which unemployment equals NAIRU. That matches Professor Frankel’s description of CBO potential GDP.

      On (6), a balanced budget multiplier — increase in G (govt spending on goods and services) by $1 bn and increase in lump sum T by $1 bn — implies $1 bn increase in GDP.

      1. pgl

        Back in 1975 when I was a naive undergrad I listened to some Gerald Ford nonsense that matching a $28 billion tax cut with $28 billion in spending cuts would increase aggregate demand. So I penned a letter to the editors of the home town newspaper explaining the logic of the balance budget multiplier and how team Ford got this backwards. They published it but that set off a bunch of hate mail from right wingers who told me that even Henry Kissinger was a Marxist. My parents were not amused that I wrote that letter after seeing all the damn hate mail.

      2. 2slugbaits

        Menzie I think Vollrath’s point is that CBO’s definition doesn’t track with how they actually calculate potential GDP. CBO does use a production function approach, but the driver term is the labor input, and that’s driven by extrapolations from the 2005 baseline, which CBO defined as potential output. More specifically, the labor inputs are calculated by aggregating the extrapolated growth rates for all BLS job series with a 2005 baseline. Appendix B has CBO’s description of the natural rate of unemployment. Here’s Vollrath’s complaint:

        The “natural rate” for each one of the sub-groups tracked by the CBO is assumed to be whatever the unemployment rate was for that group in …. 2005? Because 2005 was the year when unemployment rates were “natural” and unaffected by a business cycle, apparently. Let that settle in for a little bit, and think about it. This has all of the same issues as the projection of LFPR.

        The unemployment rate for those with less than a HS diploma, aged 25+, was 7.4% in December 2005. The CBO methodology assumes that this is the natural rate of unemployment for that group, hence they project that the unemployment rate for this group will be 7.4% in the future. As with LFPR, does this imply that 7.4% is a physical limit on how low the unemployment rate can go for those with less than a HS diploma? No, of course not.

        There is no sense that the CBO projection represents a lower bound on unemployment (and hence an upper bound on employment). It’s just using a guess as to what a “normal” economy might look like. It is a mistake to use this projection as an upper bound on what the economy could do in the future.

        Thanks for the correction on the balanced budget multiplier.

        1. Menzie Chinn Post author

          2slugbaits: I must be missing something — CBO doesn’t view the natural rate as a upper or lower bound. So it’s *other people* misinterpreting the CBO measure?

          1. 2slugbaits

            Menzie Let me try again to make this a little clearer. CBO’s methodology does not imply a strict upper or lower bound. That wasn’t really Vollrath’s point. CBO’s methodology is simply an extrapolation of what the economy looked like in 2005. Or rather, the production function they use is based on input factors (primarily labor) that reflect the 2005 baseline. The problem is that CBO’s own description of what they do connotes something very different. For example, here’s how CBO defines potential GDP:

            A measure of the economy’s fundamental ability to supply goods and services, potential output is an estimate of the amount of real GDP that is attainable if domestic inputs of labor and capital are employed at maximum sustainable rates.

            When people familiar with the English language read “maximum sustainable rates” they quite naturally interpret that as implying some kind of limit that cannot be breached indefinitely without running into inflation. That was Vollrath’s point. There’s nothing in the CBO’s actual methodology that supports the common understanding of how they define potential GDP. CBO’s methodology does not match their description of potential GDP as reflecting “maximum sustainable rates.” CBO’s actual methodology simply reflects what the economy should look like relative to what it looked like in 2005 absent any cyclical effects. How seriously should we take that estimate of potential GDP? CBO’s assumptions are generally reasonable, but let’s not forget that they’re using a baseline from 20 years ago that crossed two deep recessions. It would be nice if we could take potential GDP seriously, but at this point it appears to be about as useful as the NAIRU. Potential GDP and NAIRU are useful concepts, but may not be empirically available.

          2. Moses Herzog

            I’m sure a significant portion of this is going over my head, (I’m throwing this up in the air for both gentlemen). Keep in mind I’m largely talking out of my A__ because I haven’t read all of Vollrath’s post yet……

            Isn’t Vollrath’s core complaint the “labor” inputs that are being used to calculate the potential GDP?? That is if CBO (or “we”) is assuming that 7.4% is a “normal” rate, that you’re going to get a potential output boundary that is “artificially” low, and that therefor the gap number is going to be smaller than it “should” be??

    2. Paul Mathis

      Your point 6 does not go far enough.

      Every American state every year reports a “balanced budget” even though there are trillions of dollars of municipal bond debt outstanding. That paradox is possible because every state, like every corporation, treats capital expenditures as an exchange of assets, not operating costs, e.g., a new bridge is an asset exchanged for the tax dollars used to pay for it. If the bridge generates more economic growth than those taxes reduced growth, the bridge is a net positive for the economy. Most Americans understand this when they buy a house and take out a mortgage: eventually the house will be a net positive for their wealth so it is a valuable asset.

      But the federal government does not follow standard accounting practices and treats all expenditures as operating expenses. So the new airport that generates millions of dollars of revenue for the economy is considered a just a cost regardless. Obviously, the federal accounting is nonsense especially when the federal government can and does print new money to pay its expenses. If the federal government sold off all its infrastructure, parks, etc., it could pay off all its debt.

      If new infrastructure has a net positive cost/benefit, it should be built regardless of the “debt” implications.

      1. pgl

        There are those who break this out in terms of capital budgets v. operating expenses but these folks get too little press.

      2. Baffling

        Paul, i am not disputing your comment. But i am under the impression that alot of our infrastructure and assets are state and local government owned rather than fed owned. Thinking of highways, bridges, hospitals, schools, etc. so your point is valid, but in application who owns what makes a difference in how those assets are recorded on the books. The feds fund alot of assets they do not own.

    3. pgl

      “5. Should we be worried if nominal interest rates increase but real rates don’t? Won’t nominal tax revenues increase proportionally?”

      Back in the late 1970’s and the early 1980’s there was a slew of excellent publications from conservatives like Barro and Friedman as well as liberals who all got this basic point. Neutral inflation is just that which is why we should stop reporting interest expenses as nominal interest rates times debt and start reporting them as real interest rates times debt.

    4. Barkley Rosser


      The argument for the 2% inflation target was never that inflation would accelerate if it was higher than that. The old target had been implicitly zero percent, and it was largely Janet Yellen who convinced Greenspan it could be higher than that, with New Zealand being the first central bank to target 2%. But the argument for a low but positive target, something like 2%, came from Janet’s husband, George Akerlof in a paper in the mid-90s at Brookings with Dickens and Perry. It was actually a micro efficiency argument based on the downward nominal rigidity of wages. Relative real wages need to be able to change, but if nominal wages cannot decline, then, allowing for some productivity improvement, this means that a low but positive rate of inflation is needed to allow for appropriate relative real wage adjustments to occur.

      That was the argument, although it has kind of gotten forgotten in this era of so many central banks glomming onto that2% target. It has become sort of a fetish unto itself. But nobody ever argued that 2% was a boundary between stable and accelerating rates of inflation. That was always supposed to be tied to the NAIRU, which has looked pretty ridiculous for a long time, at least since the mid-90s, if not earlier.

      1. 2slugbaits

        Barkley Rosser nobody ever argued that 2% was a boundary between stable and accelerating rates of inflation

        Well…going back about 15-20 years I certainly read plenty of papers that did make that argument. Those papers were used as a reason why we shouldn’t go to a 3% or 4% target, which some economists (e.g., Krugman and Delong) were arguing for. I can see where Akerlof et al. would argue for a 2% target as a kind of floor, but an argument for setting a 2% target as a kind of ceiling would be something different.

        1. Barkley Rosser


          Well, this is a sideshow but I just searched for one, any one. I could find none. Certainly there were inflation hawks who defended the idea of the 2% inflation target being a ceiling rather than a target, but I do not remember any of them arguing it was the boundary between a zone of stable and accelerating inflation, although some would argue that inflation might accelerate if allowed to go above 25. But I remember no published articles arguing 2% was such a boundary.

          Can you find any?

          1. Barkley Rosser

            Just to emphasize the point here, the acronym we long dealt with and has been much written about has been NAIRU, the non-acclerating-inflation rate of unemployment, also long thought to equal the “natural rate” cooked up by Milton Friedman in his AEA address (pubbed 1968), that has also pretty carelessly and widely been associated with this “potential output” that is also somehow supposed to be tied to a boundary between a stable inflation zone and an accelerating one, despite massive amounts of accumulating evidence against any of this.

            I am unaware of anybody ever writing about a NAIRI, a non-accelerating-inflation rate of inflation. This is not a concept that has been used, and I am taking the absence of a reply from 2slugbaits to indicate that he is unable to find any papers on this anymore that I was, although I do not wish to poke at him very hard. But if NAIRU is ultimately not all that useful, a never-existing NAIRI is even less so.

    5. Baffling

      How confident are you of statement 3. No matter how you get there, i really do not see how 4 or even 5% inflation would be a problem. How bad do you think 4% inflation would be? What would its impact be? I understand a sudden change could have some impact, but i do jot know if that impact would be sustained. If numbers start to exceed 6% then there would be an issue. I just fail to envision the inflation disaster some people proclaim. I am asking alot, but could you walk me through how a quick rise to 4% would be so detrimental?

  5. Not Trampis

    agree with Sluggsy.
    on accelerating inflation that would need a wages breakout as we call it down under. I cannot see it

  6. ltr


    The Macroeconomics of Low Inflation

    THE CONCEPT of a natural unemployment rate has been central to most modern models of inflation and stabilization. According to these models, inflation will accelerate or decelerate depending on whether unemployment is below or above the natural rate, while any existing rate of inflation will continue if unemployment is at the natural rate. The natural rate is thus the minimum, and only, sustainable rate of unemployment, but the inflation rate is left as a choice variable for policymakers. Since complete price stability has attractive features, many economists and policymakers who accept the natural rate hypothesis believe that central banks should target zero inflation.

    We question the standard version of the natural rate model and each of these implications. Central to our analysis is the effect of downward nominal wage rigidity in an economy in which individual firms experience stochastic shocks in the demand for their output. We embed these features in a model that otherwise resembles a standard natural rate model and show there is no unique natural unemployment rate. Rather, the rate of unemployment that is consistent with steady inflation itself depends on the inflation rate. In the long run, a moderate steady rate of inflation permits maximum employment and output. Maintenance of zero inflation measurably increases the sustainable unemployment rate and correspondingly reduces the level of output. We show that these effects are large, not negligible as some previous studies have claimed.

    The view that unemployment will settle at a fixed natural rate if any steady rate of inflation is maintained is presumably the rationale for the Economic Growth and Price Stability Act of 1995, proposed by Senator Connie Mack. According to the preamble of this bill, “because price stability leads to the lowest possible interest rates and is a key condition to maintaining the highest possible levels of productivity, real incomes, living standards, employment, and global competitiveness, price stability should be the primary long-term goal of the Board of Governors of the Federal Reserve System.” But as our results show, a target of zero inflation will impose permanent real costs on the economy rather than the real benefits this preamble describes….

      1. Barkley Rosser

        Oh, did I say 1966? Sorry, I meant 1996. Had George in to speak on it here at JMU at the time.

        1. Barkley Rosser

          No, I see it was ltr, making one of her rare factual blunders, even as many here are unhappy about her ignoring a lot of unpleasant facts.

  7. ltr

    …even as many here are unhappy about — ignoring a lot of unpleasant facts.
    …even as many here are unhappy about — ignoring a lot of unpleasant facts.
    …even as many here are unhappy about — ignoring a lot of unpleasant facts.

    [ Interesting, I am always polite but there is the need to harass, the need to frighten, the need to try to intimidate. We must know whether this Catholic can recite the catechism, just as prescribed. Then again, there is a New York Times columnist for whom even Dear Francis was found not sufficiently Catholic.

    Am I being polite enough? I hope so. ]

    1. Barkley Rosser

      Now now, ltr, I am not the one bugging you the most about those facts and have not even mentioned what they are, and I am not calling you any names or saying you are impolite or threatening you. Heck, I noted you are usually factually accurate in what you post, even if there was a minor flub on this date here. Methinks you are getting a bit too worked up here over not much, given how much heck others have given you over the matters in questions, those “unhappy” others.

    2. Baffling

      Ltr, is it impolite to ask you to explain the treatment of the uighers? Or the crackdown in hong kong? Perhaps it is best if you identify the topics you find offensive, so perhaps we can avoid them. I am not a mind reader, so you will need to be specific.

  8. ltr

    …even as many here are unhappy about — ignoring a lot of unpleasant facts.

    [ A perfectly frightening and intimidating sentence. I know the literature so I should be prepared for such bullying, but I am nonetheless frightened.

    No matter, the bullying will continue and I will be afraid, but I will go on just as I realize I must. ]

      1. baffling

        this is ltr’s way of deflecting away from difficult conversations. as long as he/she is “polite” in the conversation, it appears inappropriate to address uncomfortable topics.

      2. Barkley Rosser

        Thank you for pointing this out, Menzie.

        Really, ltr, this was basically mild joking. Really. nothing intended to be ferocious at all as you claim. I think there is no reason for you to be either frightened or intimidated by my comments I mean, gosh, are you afraid I am going to show up at your place of residence and pelt it with eggs or hang toilet paper around the area? Heck, even if I were of a mind to do such a thing, which I am not, I do not even know where you live.

        I will note that there are people much more bothered by what baffling noted and that I am not going on about. These sorts of statements by you about me are not going to impress them at all, quite the contrary. They seriously damage your credibility. Absolutely everybody here for any time at all knows that I was not trying to harass or frighten or intimidate you. Really, ltr. I have a very warm attitude towards you, despite some disagreements, and I have defended you here a number of times on various grounds, although perhaps you did not notice or have forgotten. Please calm down.

      3. Moses Herzog

        I wanna say something while buzzed on Strawberry Margarita, (am I allowed that??).

        I could forgive everything “ltr” says if I just thought it was a person (man) who loves their own native country. But I don’t believe that is the case here. I think something else is going on here.

  9. ltr

    …even as many here are unhappy about — ignoring a lot of unpleasant facts.

    Now now, —, I am not the one bugging you the most about those facts…. Methinks you are getting a bit too worked up here over not much, given how much heck others have given…

    [ Sort of like “The Walrus and the Carpenter,” in which Alice wonders who ate the most of the Oysters.

    The work of Chester M. Pierce could be instructive. Then too, there is Lion Feuchtwanger. ]

    1. baffling

      perhaps you could correct us on what is happening with the uighers and hong kong? i never see you post any references to what has been happening in those locations.

      1. Barkley Rosser

        Uh oh, baffling. Now you have done it. You are just as bad as all those people who criticized Martin Luther King, Jr. for his position on Vietnam because he failed to criticize the people of Vietnam. You must understand that to ltr the CCP and “the people of China” are one and the same, so if you dare to criticize the CCP for its policies in certain locations, well, you are actually criticizing the people of China themselves. How shameful and so like some KKK person criticizing ML King. Shame on you! I hope this message suitably intimidates and frightens you out of ever doing such an awful thing again!

    2. Barkley Rosser


      I do wish to thank you for locating the actual paper by Akerlof, Dickens, and Perry that I was referring to. I am sorry that we got off on you making a rare mistake regarding its date, which then led to me making a wisecrack that then got way misinterpreted. The paper was the important part and the rest was just silly noise.

  10. Moses Herzog

    When I lost my GF from Chaoyang China, I “lost it” listening to a lot of music, really, it’s not too difficult to “lose it” after you lost someone very important to you, but this music about made me cry in all those “internet bars” In China in those days

    I really still “lose it” listening to these songs, TURN IT UP

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