First Annual FRB-NYFED Conference on the “International Roles of the U.S. Dollar”

That’s the title of a conference (June 16-17) I had the pleasure of participating in. The agenda is shown below (I have included links to the papers where publicly available, but they might not be to the most recent version; Online agenda). This conference went well beyond recounting the main features associated with the dollar’s role, presenting both new empirical work (some based on micro data) and new theoretical work — ranging from the dominant currency pricing in a New Keynesian model to an explanation for staged capital account liberalization for the Chinese bond market, against a backdrop of rapid developments in digital currencies/assets and financial sanctions.

Welcome remarks by Ricardo Correa (Federal Reserve Board)

Session 1 (Chair: Bo Sun – Federal Reserve Board):
Granular Investors and International Bond Prices: Scarcity-induced safety [pdf]
Authors: Ester Faia (Goethe University Frankfurt), Juliana Salomao
(University of Minnesota), Alexia Ventula Veghazy (European Central Bank)

Discussant: Wenxin Du (Federal Reserve Bank of New York)

Foreign Investors and US Treasuries [pdf]
Authors: Alexandra Tabova (Federal Reserve Board) and Frank Warnock (University of Virginia Darden School of Business)

Discussant: Jesse Schreger (Columbia Business School)

Session 2 (Chair: Frank Warnock – University of Virginia):
The Costs of Exorbitant Privilege: Foreign Reserve Management and Domestic Liquidity.
Authors: Ron Alquist (Financial Stability Oversight Council), R. Jay Kahn (Office of Financial Research), Karlye Dilts Stedman (Federal Reserve Bank of Kansas City)

Discussant: Stephanie Curcuru (Federal Reserve Board)

Central Bank Swap Lines: Micro-Level Evidence [pdf]
Authors: Gerardo Ferrara (Bank of England), Philippe Mueller (Warwick Business School), Ganesh Viswanath-Natraj (Warwick Business School), Junxuan Wang (Warwick Business School)
Discussant: Steven Kamin (American Enterprise Institute)

Friday, June 17 2022

Remarks by Chair Jerome Powell (Federal Reserve Board) [Video]

Session 3 (Chair: Ricardo Correa – Federal Reserve Board):

Keynote by Barry Eichengreen (University of California at Berkeley) [pdf]

Global Inflation and Exchange Rate Stabilization under a Dominant Currency
Authors: Giancarlo Corsetti (Cambridge University), Luca Dedola
(European Central Bank), Sylvain Leduc (Federal Reserve Bank of San Francisco)
Discussant: Cristina Arellano (Federal Reserve Bank of Minneapolis)

Panel 1: Drivers and Implications of the Dollar Roles

Moderator: Linda Goldberg (Federal Reserve Bank of New York)
Helene Rey (London Business School)
Menzie Chinn (University of Wisconsin) [slides]
Jeffry Frieden (Harvard University)
Arvind Krishnamurthy (Stanford Graduate School of Business)

Session 4 (Chair: Robert Lerman – Federal Reserve Bank of New York):
Internationalizing like China [pdf]
Authors: Christopher Clayton (Yale School of Management) Amanda Dos
Santos (Columbia Business School), Matteo Maggiori (Stanford University
Graduate School of Business), Jesse Schreger (Columbia Business School)

Discussant: Eswar Prasad (Cornell University)

Slowed-Down Capital: Using Bitcoin to Avoid Capital Controls
Authors: Jiakai Chen (University of Hawaii) and Asani Sarkar (Federal Reserve Bank of New York)

Discussant: Eugenio Cerutti (International Monetary Fund)

Panel 2: Digital assets and the U.S. dollar

Moderator: Lorie Logan (Federal Reserve Bank of New York)
Neha Narula (MIT Media Lab)
Hyun Song Shin (Bank for International Settlements)
Rebecca Patterson (Bridgewater Associates)
Paul Mackel (HSBC)

Closing remarks by Beth Anne Wilson (Federal Reserve Board)

Organizing Committee:
• Ricardo Correa, Federal Reserve Board
• Linda Goldberg, Federal Reserve Bank of New York
• Robert Lerman, Federal Reserve Bank of New York
• Bo Sun, Federal Reserve Board

Scientific Committee:
• Gianluca Benigno, Federal Reserve Bank of New York
• Alain Chaboud, Federal Reserve Board
• Stephanie Curcuru, Federal Reserve Board
• Wenxin Du, Federal Reserve Bank of New York
• Antoine Martin, Federal Reserve Bank of New York
• Friederike Niepmann, Federal Reserve Board
• Fabiola Ravazzolo, Federal Reserve Bank of New York
• Frank Warnock, University of Virginia
• Tony Zhang, Federal Reserve Board

Here’s my rough-and-ready commentary on what were to me notable aspects of the two days.

The keynote talk by Barry Eichengreen was, as always, incredibly insightful and careful. He summarized the results of his recent paper, The Stealth Erosion of Dollar Dominance: Active Diversifiers and the Rise of Nontraditional Reserve Currencies (with Serkan Arslanap and Chima Simpson-Bell). Anybody who wants to know the analysis using the most up-to-date and detailed data on reserve holdings should read this paper. Among other things, it uses a Chinn-Frankel (2007) type logistics transformed share variable to estimate the determinants of aggregate reserve holdings; it also uses the data used in Chinn-Ito-McCauley (2022) to estimate the individual central bank determinants of reserve holding composition. The paper stresses the rise of non-traditional reserve currencies as the dollar’s share is eroded: Australian dollar, Canadian dollar, Korean won. Contrary to what might be expected (and certainly anticipated a few years back), the Chinese renminbi’s share accounts for only about a quarter of the dollar’s decline.

After an extensive Q&A of Eichengreen’s paper, a lively exchange ensued in the following panel,  focusing on drivers and implications of the US dollar’s role in the international monetary system (in 10 minutes comments, moderated by Linda Goldberg).  Helene Rey clearly and succinctly summarized in a couple figures the contrast between the centrality of the US in the global financial network vs. the multi-pole aspect of the trade network. Then, highlighting the deep liquid markets and lender of last resort aspect of US assets, explained why the euro did not come close to overtaking the dollar (in the past). My presentation is here, while Jeffry Frieden observed the mutually reinforcing aspects of US geopolitical power and will to engage internationally, and the dollar’s role as an economic force; take away that willingness to engage internationally and dollar centrality is no longer guaranteed in the longer term. Arvind Krishnamurty laid out what makes a “safe asset”, and why safe assets are key to liquidity. In his theoretical framework, disengaging payments systems from assets could have drastically different effects in emerging markets vs. advanced economies. He also noted that US Treasurys as safe assets is not a given – too much debt will compromise will compromise that role.

All the presentations (papers and comments) were interesting, and as somebody not in the center of these debates over the past two years, extremely informative. As always, a conference is a learning experience, but more so in this case for me.  A few findings that I considered surprising in the papers.

Tabova and Warnock (Foreign investors and US Treasuries), the authors find that foreign investors are not necessarily that much worse than domestic investors in terms of their returns on US Treasuries. The commonplace thought that they are is an artefact of the attributes of the data used in previous analyses. (Still, there is a differential, even if it is not statistically significant).

In Alquist, Kahn and Stedman (The costs of exorbitant privilege), the authors documented how the behavior of holders of large amounts of reserves (oil exporters) managed their reserves in a way (sales) that affected the repo market in March 2020. This is a manifestation of the fact that if you have a truly internationalized currency, to some extent the fate of your financial markets is tied up with how foreign economies react to shocks.

Corsetti, Dedola and Leduc’s presentation of Global Inflation and Exchange Rate Stabilization under a Dominant Currency explained how under dominant currency pricing (effectively, traded goods are priced in dollars, and their prices are sticky), an optimal policy is one where the dominant currency country internalizes the impact of dollar price stickiness on foreign country prices and output. Of course, central bank mandates do not typically require taking into account such factors — so policy will be suboptimal if they are couched solely in terms of output and inflation gaps.

The primarily theoretical paper by Clayton, Dos Santos, and Maggiori (Internationalizing like China) provides an explanation for why China’s policymakers engaged in a staged opening up of their bond market. Essentially, it’s a way to build up credibility in such a way as to encourage “fickle” capital inflows (fickle being private investors, as opposed to official investors like central banks and sovereign wealth funds). Eswar Prasad, the discussant, noted that the assumption that the government seeks to maximize it’s monopoly power to extract the lowest interest rate might not be a good one.

Chen and Sarkar (Slowed down capital: Using bitcoin to avoid capital controls) show how the spread between bitcoin in China and Bitcoin elsewhere widened when capital surged out of China. For those who think the primary usefulness of cybercurrencies is circumventing capital controls or otherwise avoiding regulation and taxes, these results were affirming.



66 thoughts on “First Annual FRB-NYFED Conference on the “International Roles of the U.S. Dollar”

  1. Barkley Rosser

    Thanks, Menzie. Am I right to catch aa a scattered subtext that not only are there advantages for a nation to have its money be the dominant reserve currency, but also costs, as in the matter of having to absorb shocks coming from other countries that hold lots of your currency doing things or experiencing things?

    As it is, I think there has always been this duality, with the old well-known disadvantage being that having one’s currency be the dominant world reserve currency increases the demand for it, thus arguably inducing a chromic overvaluation of one’s currency, which can leas to chronic current account deficits, which has implications for domestic employment, with indeed the US running chromic current account deficits for many decades. Did anybody bring up this old chestnut at the conference and does it still hold?

    1. Menzie Chinn Post author

      Barkley Rosser: I think it is so well known that being a reserve currency imposes constraints in this group that the Alquist et al. paper was understood to be one manifestation. Anytime one talks about China’s RMB internationalization policy, this point comes up implicitly if not explicitly as a reason for their hesitancy in moving forward.

      1. Moses Herzog

        China wants their “credibility” as an “internationalized” currency, but they don’t want capital flight. Goofball beerguts like me say this is “having your cake and eat it too”. I expect this last phrase to enter Economics lingo any day now. Possibly named after me, or I have no interest. In fact it must be named after me. “Moses’ Cake Phrase”. No debate.

        Side note~~ “International” is the most overused and misused English term in China.

  2. ltr

    April 15, 2022

    Wonking Out: Why the dollar dominates
    By Paul Krugman

    Is the U.S. dollar about to lose its special dominant role in the world financial system? People have been asking that question for my entire professional career. Seriously: I published my first paper on the subject in 1980.

    A lot has changed in the world since I wrote that paper, notably the creation of the euro and the rise of China. Yet the answer remains the same: probably not. For different reasons — political fragmentation in Europe, autocratic caprice in China — neither the euro nor the yuan is a plausible alternative to the dollar.

    Also, even if the dollar’s dominance erodes, it won’t matter very much.

    What do we mean when we talk about dollar dominance? Economists traditionally assign three roles to money. It’s a medium of exchange: I don’t give economics lectures in payment for groceries; I get paid in dollars to lecture and use those dollars to buy food. It’s a store of value: I keep dollars in my wallet and my bank account. And it’s a “unit of account”: salaries are set in dollars, prices are listed in dollars, mortgage payments are specified in dollars.

    Many currencies play these roles in domestic business. The dollar is special because it plays a disproportionate role in international business. It’s the medium of exchange among currencies: Someone who wants to convert Bolivian bolivianos to Malaysian ringgit normally sells the bolivianos for dollars, then uses the dollars to buy ringgit. It’s a global store of value: Many people around the world hold dollar bank accounts. And it’s an international unit of account: Many goods made outside the United States are priced in dollars; many international bonds promise repayment in dollars.

    Where does this continuing dominance come from, given that the U.S. economy no longer has the commanding position it held for a couple of decades after World War II? The answer is that there are self-reinforcing feedback loops, in which people use dollars because other people use dollars.

    In that old 1980 paper I focused on the size and thickness of markets. There are a lot more people wanting to exchange bolivianos and ringgit for dollars than there are people wanting to exchange bolivianos for ringgit, so it’s much easier and cheaper to make boliviano-ringgit transactions indirectly, using the dollar as a “vehicle,” than to try to do those transactions directly. But all those indirect transactions make dollar markets even bigger, reinforcing the currency’s advantage.

    Gita Gopinath, the first deputy managing director of the International Monetary Fund, and Jeremy Stein, a professor of economics at Harvard, have described another feedback loop involving pricing. Because many goods are priced in dollars, dollar assets have relatively predictable purchasing power; this reinforces demand for these assets, which in turn makes it somewhat cheaper to borrow in dollars than in other currencies. And cheap dollar borrowing in turn gives businesses an incentive to limit their risks by pricing in dollars, again reinforcing the dollar’s advantage.

    So what might dislodge the dollar from its special position? Not that long ago the euro seemed like a plausible alternative: Europe’s economy is huge, as are its financial markets. As a result, many people outside Europe hold euro assets and, when selling to Europe, set prices in euros. But one remaining U.S. advantage is the size of our bond market and the liquidity — the ease of buying or selling — that market provides.

    Until its sovereign debt crisis in 2009, Europe seemed to have a comparably large bond market, since euro bonds issued by different governments seemed interchangeable and all paid about the same interest rate. Since then, however, fears of default have caused yields to diverge:

    1. ltr

      April, 1979

      Vehicle Currencies And the Structure Of International Exchange
      By Paul R. Krugman

      This paper is concerned with the reasons why some currencies, such as the pound sterling and the U.S. dollar, have come to serve as “vehicles” for exchanges of other currencies. It develops a three-country model of payments equilibrium with transaction costs, and shows how one currency can emerge as an international medium of exchange. Transaction costs are then made endogenous, and it is shown how the underlying structure of payments limits, without necessarily completely determining, the choice and role of a vehicle currency. Finally, a dynamic model is developed, and the way in which one currency can displace another as the international medium of exchange is explored.

  3. Moses Herzog

    Of course Menzie is going to tell me all of these folks are kinda like NBA all-stars (and I wouldn’t care to start a fight over it). But I just wanted to say Helene Rey has caught my eye in different lectures and she strikes me as a real sharp cookie. Like yeah, the others are all-stars, but she’s like a ’88-’89 Clyde Drexler. ‘Bout as sharp as they come.

  4. Moses Herzog

    Menzie won’t believe this in a million years (neither would I) but I happened upon (this exact same day) another paper by this same gentleman that Menzie mentions above. and it was pure coincidence. I was over at FT Alphaville. I try to wander over there every 2-3 weeks or so (they’re not as prolific or as high quality as they used to be). And I found this dead link related to treasuries (like the deal where it tells you the web page disappeared or “no longer exists” deal), So I hopped over to “working papers” on OFR, the same site where the dead link was and hunted for recently done papers related to Treasuries, and I found this. I wasn’t searching for his name or even know he was connected to OFR.

    Both Kahn papers look great. And I want to read whatever it was Helene Rey did. But Gopinath’s new paper is at the top of my list. Damn, too much good stuff to read, never can catch up even when I do shake off my lazy bones.

    1. macroduck


      That paper is a gold mine. Thanks for the link.

      I was at first curious as to why the LTCM episode wasn’t mentioned, but a bit of reading made the reason clear. Big liquidity problems in all three cases, but the source of the liquidity problem was different in the LTCM case.

      So grazie.

      1. Moses Herzog

        You can use the word “liquidity”, it’s not technically incorrect. But it’s kind of a huge pet peeve of mine (call it a “personal problem” if you prefer) that when we talk about large private banks and central banks this insistence on using the word “liquidity”. Often times it’s a funding problem or a capital problem or an equity/collateral problem but the banks themselves and the people writing about them “can’t” say it’s a funding or capital problem, they insist on calling ANY banking problem a “liquidity” problem.

        Try that crap out next time you default on a mortgage loan or max out your credit cards. “Yeah, you got it Mr. Banker, Mr. Mortgage Loan fly-by-night. Got another liquidity problem again: Don’t you hate t when that happens?? Oh wait, I forgot all you bankers and mortgage loan sheisters specialize in ‘liquidity problems’. How silly of me. I forgot it’s only dopes like me that have funding or capital problems. I know ‘cuz Phil Gramm and Peter J. Wallison explained it to me once. I don’t know why I keep forgetting where I fit into all this. I’m a deadbeat delinquent and you bankers are just short on liquidity.”

        Another thing I need a wristband for so I don’t forget.

        1. macroduck

          “Liquidity” is one of those word which means the same thing in general, but many different things in speciic cases. Careful speakers and writers make sure their use is clear, but inevitably there are many more who are less careful. Gets to be annoying I know.

          1. Moses Herzog

            Esther George was the “lone dissenter” with a 50bps vote. Wonder what (if anything?) we are to take out of that?? Like Alan Blinder at one point she’s the “biggest dove”?? I respect anyone who goes against the grain (within reason). I bet if Tim Duy was still blogging with Thoma, Duy would have provided us with a good answer.

            Some private economists were making the same “policy uncertainty” refrain as Mrs. George. I tend to lean on her side on it, but I will give it is debatable.

            Quiet on the streets this early evening where I live. It tends to be quiet on Sunday nights here, but even more quiet than usual.

      2. macroduck

        By the way, one of the symptoms on the 2020 event was “fragmentation” in Euro-zone sovereign debt markets – in other words, widening spreads between Germany and mini-Germanys on the one hand and everybody else on the other.

        Well, what do you know?, the ECB just instituted new a new policy to deal with current fragmentation in sovereign debt markets:

        So I say again, nice link – quite timely. While one side of central banks works to stem inflation with tools ill-suited to the job, you can bet your bippy another chunk is running paper exercises on plumbing and liquidity and contagion, so as to be ready to intervene at a moment’s notice.

        I wish our resident intellectual criminals would pipe down so we could spend more electronic ink on issues like this one. They won’t, but the rest of us can still discuss grown-up stuff.

        1. Moses Herzog

          I will try to get around to reading this ECB policy item. Looks interesting and edifying. Lots of Europe stuff I don’t get. But I will say even before Professor Chinn’s post I was aware of some of the foreign demand effecting repos here in America. Which I think many people missed. But a lot of this stuff I am still not grasping and even the repo stuff as it relates to Europe I need to review again.

        2. Moses Herzog

          @ Macroduck
          BTW, I think fragmentation, in European monetary policy, even fiscal policy, is going to be an incredibly incredibly hard problem to solve. Nearly impossible to solve. And it gets down to root things, visceral things, such as differences in culture. Does anyone believe when they are not forced that countries such as France and Italy are ever going to be as…. “spartan” as Germany when they aren’t forced to by “between a rock and a hard placer” economic conditions?? It’s something engrained in the cultures, it’s not like flipping a light switch. Which is another reason “the troika” is feeding people rainbows, unicorns, and cherub angels that do not exist. The biggest demon/LIAR in the group being the “EC”.

          1. baffling

            fragmentation was essentially what happened during the European sovereign debt issues with Spain, Greece et al a decade ago. and agree with you, not sure if we are any closer to a solution. especially when things get truly hairy. but now the situation is reversed, with Germany perhaps more susceptible than some of those other European nations due to its energy predicament.

      3. macroduck

        By the way, here’s the picture:

        Commercial paper spreads blew out nearly as badly in March 2020 as during the GFC. The Fed fixed the problem in two shakes. Noice he widenig of qnd volatility in the spread lately. Not as bad as either of the other two episodes, but not a happy sign.

  5. rsm

    “Eswar Prasad, the discussant, noted that the assumption that the government seeks to maximize it’s monopoly power to extract the lowest interest rate might not be a good one.”

    But the repo rate is independent of the nominal yield, amirite?

    1. macroduck

      You are never right, and this as wrong as anything you’ve ever written. Where do you get this stuff?

      Read the link Moses provided, for heaven sake. Feedback between repo and collateral is a common channel for transmission of financial shocks.

    2. macroduck

      And another thing…repo is quoted in nominal terms. It is a nominal yield. So in your world, a nominal yield is independent of a nominal yield? That’s a remarkable position to hold.

  6. Moses Herzog

    This should be on your local PBS on Monday June 20th. Central time 9pm. Eastern time 10pm. Mountain time 8pm, Pacific time 7pm. Don’t miss it peoples.

    Again, your local PBS station, should be the main one, like “13-1” or whatever the number is where you are, the first channel with the “dash 1” ending. I think this will probably hit me much harder than it would have in my younger years. There’s something about spending extended time in a land foreign to your own that changes your perspective on these things. I got myself into some semi-dangerous situations, but I’m not gonna be a dramaqueen about it. Nothing like what Vincent Chin went through. And other Asians and many minorities recently. Spurred by who?? Partly by some orange being. Possibly orange and demonic.

    1. Moses Herzog

      Maybe Menzie can invite a UW-Madison sociology prof or UW-Madison Asian studies prof to do a post on it. I think it would be stimulating and worthy. I think discussion helps. I feel like discussion has helped me progress on these things, from my college days certainly.

      I believe I have openly expressed here on the blog that it used to anger me when Asians would speak their native language on the university campus I attended. it really did steam me (Even though I had one casual friend from Taiwan (if wither of us missed lass we would let each other borrow the missed class notes, and we would talk sometimes walking around campus) I am not proud of that, but I am being open on what goes on in people’s minds with narrow view of the world. I believe being open about prior views, even when shameful, moves on the discussion But I remember being very angry at Asians that didn’t speak English in front of me. I felt at that time, only because they were in my presence, that they “should” speak English. When I went to China, I became the “rude” foreigner not willing to make the effort to learn the language better. Kinda makes you feel like a heel–worse really.

  7. Moses Herzog

    These are the only orange creature links that I now click on or link to.

    And even some of these I don’t click on, that I view as possible “clickbait”. Because I am not rewarding non-journalistic media for promoting this bastard. I want him convicted, in prison, or a victim of the NRA and and the gun psychos. I don’t care to hear or see the bastard unless it’s behind bars with a significant prison sentence. And I will NOT support Biden for President unless the Justice Dept goes after him. When Biden or his justice Dept decide, like President Ford that they will not prosecute this crossbreed wild boar with a rotten Sunkist orange, I will be finished with Biden, like he is a tainted leftover pizza he’s going into the garbage and I’ll be looking for Bernie to run again or any other solid Democrat candidate to vote for in 2024. That’s the moment I’ll be finished with Biden. He can stand next to Nancy Pelosi and the other worthless Democrats that think impotent civility is how to deal with the Ted Cruz’s of the world.

    1. baffling

      the challenge with trying and convicting trump is similar to a mafia kingpin. it can be quite difficult to tie him personally to a specific crime upon which he will be convicted. he is a master at getting others to put themselves in jeopardy, while protecting himself. he has been doing this in his business life for decades. notice how few records of his actions exist while in office? notice how conveniently his lieutenents disposed of the evidence? of course, eventually every con man will get caught. but this guy is a real professional at protecting himself at the expense of others. his use of legal proceedings to delay action is a staple. fortunately, the government has deeper pockets. but trump knows that every 4 years, he can possibly get the reboot button pushed. his goal is not a trial that ultimately exonerates him-because he knows that will not happen. his goal is to never allow a trial to occur in the first place.

  8. pgl

    I noted earlier that Judge Luttig’s testimony before the 1/6 committee was very impressive. OK the MAGA hat wearing traitors may have noticed he spoke clearly. But before these pathetic traitors start mocking the judge, they need to understand WHY he spoke slowly.

    I might add to his explanation that sometimes you have to speak slowly so stupid people like those MAGA hat wearers can follow.

  9. Moses Herzog

    Larry “I Prefer Recessions to Inflation and High Employment” Summers on the Sunday morning talk shows:

    Larry sounded absolutely giddy over the prospect of a policy induced recession in the relative near future. When they asked him for the exact timing of the recession, Larry said people would have to wait, that will be revealed in his co-bylined story with Larry Kudlow in a future issue of National Review, and people would have to purchase that particular issue of National Review if they wanted to know. He’s hopeful it will become an ongoing series together with Kudlow in National Review. He hasn’t made a decision on a nickname for the duo’s column yet. The lead candidate is “Washed-up With Cokehead and Throwing Rotten Tomatoes”. It will have caricature art renderings of Summers and Kudlow over a drawing of Fat Buddha.

  10. pgl

    Supreme Court hears case that could limit EPA’s authority to regulate planet-warming emissions from power plants

    The Supreme Court on Monday heard what could be one of the most consequential cases for climate change and clean air in decades, with Republican attorneys general and coal companies asking the court to strip the Environmental Protection Agency of its authority to regulate planet-warming gas emissions from power plants. During oral arguments for West Virginia v. EPA, which lasted about two hours, not all of the court’s conservative majority appeared to be aligned with the petitioners, though some entertained the idea that the authority should be turned back to Congress. The hearing came on the same day that a major UN-backed climate change report showed the impacts of burning fossil fuels were larger than previously thought, and that society is running out of ways to adapt to the crisis.

    It is Father’s Day and no father who gives a damn about his kids could side with this craven GOP agenda. We need to step up the efforts to curb global warming. If the Supreme Court rules in favor of the greedy corporate interests over the interests of our planet, Congress should pass new legislation to enhance the power of the EPA.

    Now I get we will see barking insanity from our Usual Suspects. Keep in mind that these barking dogs do not give damn about our children or their children as all they give a damn about is getting gasoline and energy cheap.

    1. CoRev

      Barking Bierka – the NYC Jerk references a UN IPCC report which it appears he did not read. From a series of CNN articles he makes this claim: “It is Father’s Day and no father who gives a damn about his kids could side with this craven GOP agenda. We need to step up the efforts to curb global warming. If the Supreme Court rules in favor of the greedy corporate interests over the interests of our planet, Congress should pass new legislation to enhance the power of the EPA.”

      Other than his own unsupported opinion where is this claim, “ We need to step up the efforts to curb global warming.” supported? This level of both ignorance and unsupported exaggeration is what is causing much of the world’s inflation today.

      Inflation is costing the average tax payer far more than the past climate change mitigation estimates. Inflation largely caused by the fear of climate change. Fear that has little to no evidence in reality. Fear that has caused poor mitigation cost estimates, implementation of costly policies, and caused by emotional ignorance.

      Facts do not support this level of fear, but, what else is new?

      Your policies and their effects are on daily display to the US voters.

      1. baffling

        corev, you deny climate change because you are old and have a poor heart, which will give out any day now. but for the rest of us with a longer life span, your comments smell of selfishness and pettiness. anybody who believes in ghosts and ufo’s has really no credibility in determining the long term policy of the United States of America. ghost buster.

        1. CoRev

          Baffled – coward and Barkley, wow!! How badly are you both wrong. “corev, you deny climate change..blah” Denied climate change(s). No never! Please show us the comment.
          And Barkley “The IPCC does not support stepping up efforts to curb global warming?” So you believe that IPCC supports efforts to increase global warming?
          From the IPCC statement: ” For the assessment reports, experts volunteer their time as IPCC authors to assess the thousands of scientific papers published each year to provide a comprehensive summary of what is known about the drivers of climate change, its impacts and future risksand how adaptation and mitigation can reduce those risks.

          I don’t mix and match global warming with climate change. That is a unique quality of liberals. I’ve supported much evidence of what others think re: the costs of these polices. Only Bidenistas are in denial of these costs, the US voters clearly are not.

          1. Barkley Rosser


            I just caught you lying on another thread. This is becoming downright disgusting.

            In this case you are just cherry picking out of a massive report. Sure, they talk about adaptation and mitigation because they report that it is inevitable that there is going to be global warming. But then they show how higher levels of warming lead to greater economic damage with it clear that avoiding that would reduce the need to engage in efforts to adapt and mitigate, none of which are fully satisfactory.

            And it is funny that you drag in politics on the matter of terminology. In fact, it was to please US conservatives that the terminology was changed from “global warming,” which is the problem, to “climate change.” But that has not satisfied the climate skeptics like you. Really, some of us have been around long enough to have followed this stuff and are not going to be taken in by your increasingly ridiculous lies.

            And that is enough of dealing with this particular round of goal post moving and misquoting and lying by you, CoRev.

      2. Barkley Rosser


        Holy cow, not only do you get into your infantile barking dog nonsense again, but you come up with totally fantastic and ridiculous nonsense. The IPCC does not support stepping up efforts to curb global warming? How far out of your mind are you, or are you just consciously lying?

        And then we have your total howler that “inflation largely caused by fear of climate change.” Sorry, barking dog, but imitating Moses Herzog by emboldening a total lie does not make it true. if amything it simply heightens how completely absurd this is.

  11. Moses Herzog

    Kinda skim reading WSJ. I like to skim read, because as I’ve said many times, “nothing is worth doing unless it can be done half A–“. One thing I noticed. They say JPM has 2nd quarter GDP targeted at 2.5%. IHS Markit has their 2nd Quarter GDP targeted at 0.9%. These are two relatively well respected outfits (at least on these specific forecast matters). I think 1.6% is a pretty damned large forecasting difference for quarterly GDP, is it not? That is a large gap in forecasts.

    1. macroduck

      Is 1.6 ppt a big range for GDP estimates? Good question. So the range of estimates in the Blue Chip survey is generally wider than that, but the Blue Chip survey is done well before the fact:

      Note the timing lag implied by the Atlanta Fed graphic – lots of missing data.

      Weekly economic surveys from Bloomberg and the like don’t yet cover Q2 GDP. Estimates in those surveys may fall into a narrower range becase of more complete information, though that depends on assumptions about trade and inventories. Those two have been moving around a lot, leaving room for lots of disparity in forecasts.

      1. baffling

        considering that jpm has been the one sounding the alarm about storm clouds on the horizon, this is interesting. they seem to believe problems are ahead of us, not with us today. but I count them in the pessimistic group, overall.

  12. pgl

    Former Treasury Secretary Larry Summers said on Sunday that his “best guess” is there will be a recession in the U.S. amid growing concerns about inflation. “Look, nothing is certain, and all economic forecasts have uncertainty. My best guess is that a recession is ahead,” Summers told moderator Chuck Todd during an appearance on NBC’s “Meet The Press.” “I base that on the fact that we haven’t had a situation like the present with inflation above 4 percent and unemployment beyond 4 percent without a recession following within a year or two.”

    OK now – we will have the biggest economic know nothing EVER (Princeton Steve) jumping up and down that this means we already are in a recession. Of course that is not what Summers said. Then again – the person Obama put as head of the FED was not Larry but Janet as in the eminent Janet Yellin:

    Current Treasury Secretary Janet Yellen said in an ABC “This Week” interview on Sunday that she doesn’t believe that a recession is “inevitable.”

    ABC This Week in my view got the better guest!

    1. Barkley Rosser


      I did not see the shows, but funny thing is that when I read what you have here the substantive difference between what Summers said and Yellen said is not all that great, with probably the more important difference being one of spin and tone. This is clearly a very strange time unlike any we have seen so that forecasts are now all over the place, as the competing ones Moses reported on indicates, not to mention we have folks here claiming/forecasting we shall have negative growth for this quarter.

      Anyway, both of them are smart enough to know that things are pretty hard to figure out and thus hedging their bets, with in effect both of them essentially forecasting a substantial probability of recession at some point without specifying when. Summers, obvsiously gloating in his having successfully forecast current high inflation, if for the wrong reasons as I have argued elsewhere is more forward with it being his “best guess” that there will be a recession at some point, although that is hedged as it is not definite, merely a “best guess.”

      OTOH, Yellen comes in with her “not inevitable,” which implictly suggests that it might be pretty likely, we should not be surprised if we get one, but in fact like Summers it is not definite. It is not “inevitable,” while for him it is “best guess” there will be one, with it clear she has a negative attitude about it while he seems to be sort of champing at the bit with his “best guess.” They have basically the same forecasts, but quite different tones about them.

  13. Moses Herzog

    I wonder why when Americans are now either running completely out of savings or digging deep into savings, the Federal Reserve at that same time decides to increase credit card rates. But the Fed Res isn’t there to help big bankers. No, they are not here to do that. Just keep repeating it to yourself in rhythm in your head.

    1. Moses Herzog

      I forgot the Larry Summers “I Am Never Wrong” Principle again, “Global supply chain problems and war caused inflation rates are solved with high interest rates” Again, keep repeating it rhythmically inside your head. Damn…… why do I keep forgetting Global Supply Chain issues are created by low interest rates?!?!?!? Why do I keep forgetting?!?!?!?

      I know!!! I’ll get one of those plastic wristbands with the Summers Principle written on it.

  14. pgl

    Lawrence Summers right now is jumping up and down that the unemployment rate is below 4% and inflation is above 4%. He is telling us that this means we will have a recession next year.

    But wait – the unemployment rate was 3.8% as of April 2000 and there was one month soon after than that the annualized month to month change in CPI exceeded 6%. Now I do not recall Summers jumping up and down back then. How come? Oh yea – he was the Treasury Secretary back then.

    Of course Chuck Tood did not bring this up during their Meet the Press interview. How come?

    1. Moses Herzog

      I’ve always said Jews as a general lot tend to be quite intelligent. Chucky is one of the exceptions. Or it could be his paternal goyim side protruding through. I am 100% goyim people, calm down. I promise i’m not “self-hating”…….. most of the time anyway.

      1. pgl

        Still playing Fan Duel? You do act like this is some sort of parlor game which of course is as odious as it gets.

  15. ltr

    About the Federal Reserve Board, I have been wondering why members of the board did not publicly address warnings of excessively high home prices in 2021. When Robert Shiller is publicly warning about home prices, attention should be paid at the Fed, especially after the failure to pay attention to warnings by Shiller and the likes of Paul Krugman in 2005 and 2006.

    Also, I am wondering why Fed board members did not expressly address the banking activities that developed about trade of cryptocurrencies. At least such speculative or possibly speculative matters should be openly discussed by the Fed, with a view of cautioning. Alan Greenspan drew attention to warnings on the stock market by Shiller, so a modern precedent has been set.

    1. Barkley Rosser


      I think they may have been more concerned than they have publicly states, although I would agree the case can be made maybe not enough so. One sign is that their first move on their balances, starting quite some time ago now, was to cut back purchases of and start selling MBSs, with there having been some actual discussion of how the housing mortgage market really did not need any extra stimulus anymore. They were not making dramatic moves, but this was in fact the first sign of slowing that is now much more dramatic.

      Why they may have been holding back is that while the prices and even the more important price-rent ratios are resembling the highs from 05-06 in some markets, the overall financial situation in the housing market has been much solider than back then, many fewer flaky mortgages and apparently much better financial situations for buyers. Home peices may be too high, but it does not look like there are lots of people who have bought without proper financial support or ability to service their mortgages. That could change if the economy slows a lot and instead of a tight labor market people start losing their jobs.

      I do not know what the Fed has been or is doing about cryptocurrencies, but I note that Janet Yellen has for some time been trying to get reasonable regulation on the crucial stable coins, particularly focusing on tether. This looks to be seriously insightful and reasonable. I note that back in 2005 she was the first serious person at the Fed to express concern about the state of the US housing market as well.

      1. ltr

        I think they may have been more concerned than they have publicly stated…

        [ A helpful and reasonable commentary, for which I am grateful. The concern with which I am left, is the difficulty of unwinding 2 Shiller-bubbles * in the course of slowing overall economic activity. The unwinding of each bubble, home ownership and cryptocurrency assets, will I think likely leave structural problems that will limit new growth for a time. Shiller’s historical work tells us there is a serious real estate bubble that will deflate or “hiss” for some while, limiting economic activity.

        * Bubbles formed inadvertently as Shiller described years ago. ]

      2. ltr

        August 8, 2005

        That Hissing Sound

        This is the way the bubble ends: not with a pop, but with a hiss.

        August 25, 2006

        Housing Gets Ugly

        Bubble, bubble, Toll’s in trouble. This week, Toll Brothers, the
        nation’s premier builder of McMansions, announced that sales were way
        off, profits were down, and the company was walking away from
        already-purchased options on land for future development….

        August 25, 2006

        The Bubble Bursts

        Just a wonkish note about how bad the macroeconomics of all this could be….

      3. ltr

        February 24, 2014

        Natural Big Lies
        By Paul Krugman

        One of the really striking insights I gained from Robert Shiller is his notion that bubbles are natural Ponzi schemes — Ponzi schemes without a Ponzi schemer. What happens is that early buyers make money, drawing in more buyers, who drive prices up and allow people to make even more money, and it just keeps on growing for years. After a while, people insisting that the prices make no sense start to look stupid, and are tuned out….

        So, my insight: while the process of bubble inflation is a natural Ponzi scheme, a thoroughly inflated bubble is a natural Big Lie — that is, a lie so audacious nobody will believe that anyone would dare to invent it…..

  16. pgl

    An update on Putin’s war crimes in Ukraine. First some mixed news:

    “Combat units from both sides are committed to intense combat in the Donbas and are likely experiencing variable morale,” the British defense ministry said, per a Sunday report from The Associated Press. The defense ministry said that “Ukrainian forces have likely suffered desertions in recent weeks,” but that “Russian morale highly likely remains especially troubled.” The ministry also reported that there have been “cases of whole Russian units refusing orders and armed stand-offs between officers and their troops continue to occur.”

    More stand offs between Russian troops refusing orders and their officers please. Now on the use of the Russian ruble in Ukraine:

    Russian authorities are attempting to strip occupied Ukraine of its national culture. Russia has installed its flags, monuments, and politicians in several Ukrainian cities and towns. The occupied city of Kherson is even being forced to use the Russian ruble. Amid the ongoing violence of war, Russian President Vladimir Putin’s apparent long game in Ukraine — a nefarious attempt to assert total and long-term control on the neighboring country — is coming into clear view. From the introduction of Russian currency to the complete shuttering of Ukrainian broadcasting, the Kremlin is taking extreme measures to make Ukrainian towns look, feel, and operate like Russia.

    Now this coerced increase in the use of the ruble is going to get Putin’s pet poodle JohnH all excited and happy. After all – his master had not given this poodle a bone in weeks!

    1. Barkley Rosser


      I have reported here several times preciously about what Putin is doing in Kherson and Melitopol with the currency and all the rest of it. My observation is that AP seems to be way behind other news sources on reporting what is going on in Ukraine, although I suppose we should view it as confirmation when they get around to it.

      However, I have seen them in recent weeks being not only behind but wrong, although they are right on this one. But about a week ago I saw an AP story that looked what I had been seeing a lot of in WaPo that has since largely disappeared. They were having all these stories about how well the Russians were doing and how they were on the verge of taking Sevwerodonetsk and making all these advances,. The AP story was an especially aegregious version of this with nothing but claims of Russians advancing all over Donbas and not a mention of Ukrainian successes near Kharkiv (which seem to have stalled out now), much less near Kherson, where it seems the Ukrainians are continuing to make advances.

      Kherson really is very important. The Ukrainians are advancing, but they are now beginning to bang up against hard defensive lines the Russians have established. One disadvantage they have in terms of actually retaking Kherson is that I doubt they are as willing to just bomb the place into rubble the way the Russians have done to Mariupol and Severodonetsk and are now doing to Slovyansk, not ot mention lots of much smaller municipalities. However, I have seen that they have been urging citizens to evacuate from Kherson, so they may be planning for a seriously nasty showdown there, if they can get into the city.

  17. ltr

    June 18, 2022

    French Nuclear Power Crisis Frustrates Europe’s Push to Quit Russian Energy
    France typically exports electricity, but now it risks blackouts and a need for imported power because of problems at the state nuclear operator.
    By Liz Alderman

    PARIS — Plumes of steam towered above two reactors recently at the Chinon nuclear power plant in the heart of France’s verdant Loire Valley. But the skies above a third reactor there were unusually clear — its operations frozen after the worrisome discovery of cracks in the cooling system.

    The partial shutdown isn’t unique: Around half of France’s atomic fleet, the largest in Europe, has been taken offline as a storm of unexpected problems swirls around the nation’s state-backed nuclear power operator, Électricité de France, or EDF.

    As the European Union moves to cut ties to Russian oil and gas in the wake of Moscow’s war on Ukraine, France has been betting on its nuclear plants to weather a looming energy crunch. Nuclear power provides about 70 percent of France’s electricity, a bigger share than any other country in the world.

    But the industry has tumbled into an unprecedented power crisis as EDF confronts troubles ranging from the mysterious emergence of stress corrosion inside nuclear plants to a hotter climate that is making it harder to cool the aging reactors.

    The outages at EDF, Europe’s biggest electricity exporter, have sent France’s nuclear power output tumbling to its lowest level in nearly 30 years, pushing French electric bills to record highs just as the war in Ukraine is stoking broader inflation. Instead of pumping vast amounts of electricity to Britain, Italy and other European countries pivoting from Russian oil, France faces the unsettling prospect of initiating rolling blackouts this winter and having to import power.

    EDF, already 43 billion euros (about $45 billion) in debt, is also exposed to a recent deal involving the Russian state-backed nuclear power operator, Rosatom, that may heap fresh financial pain on the French company. The troubles have ballooned so quickly that President Emmanuel Macron’s government has hinted that EDF may need to be nationalized….

    [ Thoroughly startling, years-long investment neglect and failure to recently anticipate. ]

    1. Macroduck

      Don’t know if deterioration in cement work is the problem in this case, but radiation effects on concrete are well known. Here, for instance, but don’t be misled by the recent date of the document:

      As nuclear plants age, radiation effects on building material become an increasing concern. Vigilance and regular repair are necessary. The day managers start weighing downtime against revenue is the day they doom plants to long, “unanticipated” shutdowns.

      The revenue-driven manager’s prayer: “Dear Lord, let me be transfered or retired before my decisions come home to roost.”

      And thank goodness that at least one nuclear power plant was never finished, because far too little care was given to cement work:

      I knew some of the workers on the Marble Hill building site. They were terrified by the shoddy concrete work. Voids everywhere.

      1. ltr

        As nuclear plants age, radiation effects on building material become an increasing concern. Vigilance and regular repair are necessary. The day managers start weighing downtime against revenue is the day they doom plants to long, “unanticipated” shutdowns….

        [ Really important, but shocking in failure to anticipate and in neglect. ]

      2. baffling

        usually the effects of radiation on concrete and steel are known quantities, and accounted for in the design. it is seemingly more benign issues that will lead to nuclear plant shutdowns and repairs. the davis-besse plant in Ohio nearly had a disaster on its hands a couple of decades ago
        lots of stress corrosion and cracking occur in these pressure systems. acid leaks into places it should not go, and the pressure and temperature speed up the corrosion. the davis-besse plant was probably a year away from catastrophe, depending upon how well the emergency shutdown system would have worked. but the radiation would not have been contained.
        the fact that the public really does not know about davis-besse (and other events) is a testament to how well the energy sector controls flow of information to the public.
        in the long run, the probability that a nuclear system will cause a radiation event is far greater than most in the public want to acknowledge. current nuclear may be green, but it is really not fair to call it clean. it is not a question of if, but when, the next leak occurs. and with Ukraine, we have seen how vulnerable a nuclear plant is to military action.

      3. Ulenspiegel

        “As nuclear plants age, radiation effects on building material become an increasing concern. Vigilance and regular repair are necessary. The day managers start weighing downtime against revenue is the day they doom plants to long, “unanticipated” shutdowns.”

        But the interesting observation still is that the US NPPs are on average older than the Frech but perform better. Therefore, one hypthesis is that the Frech have more issues with construction materialsm, the alternative is that the Frech simply find more issues because they do more inspections/have stricter laws.

        1. Moses Herzog

          @ UlenRussky
          What about Chernobyl?? What happened there?? Did you know 2 of the top 3 nuclear disasters ever were in Russia, and the only other one in the top 3 which was not Russian was caused by an earthquake under the ocean?? Kinda makes you wonder how pathetically dumb Russian leadership is, doesn’t it??

          1. Moses Herzog

            I know you’re upset I know you’re a Russian troll and not German like you try to con us. You don’t need to take it personal you’re crappy at camouflaging your intentions here. I know the typical low level Russian government worker is a feckless idiot. That’s why you think MAGA level stuff works on this blog~~only~~it doesn’t.

          2. Barkley Rosser

            No, Moses, he is pretty obviously just one of the many anti-nuclear Germans, who also have tended to be somewhat more pro-Russian than many others. But he does not look like some Putin troll. He does not spout outright Putin propaganda the way JohnH and a couple of others have here.

            You get these weird ideas about various people, kind of like your apparent ongoing contention that ltr is male when pretty much everybody else here is pretty convinced that she is female, although she has never commented directly on the matter.

      4. Moses Herxzog

        It’s hard to believe France would drop the ball like this. Does anyone know if we’ve ever thanked France for pulling America out of the frying pan during World War II?? I’d hate for them to think we didn’t appreciate them saving our country and that we also treat them as beneath us when they travel here in America or something. Showing appreciation to them after their bravery. During the Saar Offensive the French were renowned for their viciousness towards German soldiers. Well, at least we showed our appreciation to them anyway for saving our own country……

    2. Barkley Rosser

      I have long supported the French peaceful nuclear program for energy production. It is especially unfortunate that in the current situation problems have appeared in their ability to provide electricity to their EU partners.

  18. ltr

    June 19, 2022

    Chinese mainland records 36 new confirmed COVID-19 cases

    The Chinese mainland recorded 36 confirmed COVID-19 cases on Saturday, with 5 linked to local transmissions and 31 from overseas, data from the National Health Commission showed on Sunday.

    A total of 123 asymptomatic cases were also recorded on Saturday, and 1,560 asymptomatic patients remain under medical observation.

    The cumulative number of confirmed cases on the Chinese mainland is 225,243, with the death toll from COVID-19 standing at 5,226.

    Chinese mainland new locally transmitted cases

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

    1. ltr

      It is critically important to notice that China has severely limited the incidence of the coronavirus, and economic growth is being quickly revived and efficiently spurred.

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