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Module 4 Extra Credit Posts for Spring 2024

For April 1 (rescheduled from March 27) In a red state like Utah, it can be hard to convince macroeconomics students of facts about Democrats. One point I try to stress is that all elected officials like to spend money on their pet government "programs". Perhaps Republicans are a little less inclined to do this. Both parties try pretty hard to sell the ideas that Democrats always want to spend more and Republicans always want to cut spending. There isn't much evidence to support this. The same thing happens with taxes. All elected officials like to cut taxes because they think this will help them get your vote. Perhaps Democrats are a little less inclined to do this. Both parties try pretty hard to sell the idea that Republicans always want to cut taxes and Democrats always want to raise them. Again, the evidence is pretty weak on this. The reality is that both parties have bought in hard to the Keynesian idea that increasing government spending and cutting taxes will imp
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Module 3 Extra Credit Posts for Spring 2024

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For March 18 I announced in class that I would skip this one because I couldn't get the article link I wanted to use to open properly. I'll see if I can get it ready for Friday. So that make this one the last one that will appear on Test 3. For March 15 A month ago we looked at the big 4 recession indicators. I was worried because we had 2 reds in January, and I said we should keep on eye on the other two. Well, now it looks like this : Those 2 missing ones for January both came in as green. Plus another green one for February. So it's kind of more of the same: some troubling data, but most of it ... isn't. That's been the story for almost 2 years now. For March 13 Yesterday, the BLS announced the CPI and its inflation rate for February. The number came in right around expectations: an increase of 0.4% in prices in February, and an increase of 3.2% over the past year. Here's the press release . On the surface, those seem like pretty small numbers.  BUT, if you
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Module 2 Extra Credit Posts for Spring 2024

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For February 19 This will be the last post from which short answer extra credit questions for Test 2 will be drawn. There's an interesting tidbit of data out this week. The FOMC makes monetary policy on behalf of the Federal Reserve (the U.S. central bank).  The FOMC walks a fine line, since they make decisions about setting interest rates. On one hand, they want to be open about their decisions. On the other hand, a lot of money is invested to figure out what they're going to do before they do it.  One way they balance these is that they do release the minutes of their 1.5 day meetings, but not until about a month after the meeting. Today we got the minutes from the January meeting covered earlier this semester. Armchair-macroeconomists and politicians will tell you that inflation is down. End of story.  Then the politicians say "Yeah us!" But there's more to it, since inflation tends to be persistent. And it can ignite again, sort of like the embers of a dying f
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Module 1 Extra Credit Posts for Spring 2024

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For January 31st This post, and all others back to the start of the semester are the ones I may ask short answer extra credit questions about on Exam 1.  *** On Wednesday we just looked at some random news links about the FOMC's monetary policy decision ( this was one , and here is another ). Keep in mind that those articles were being updated in real time, so they may look a little different with the passage of time. As expected, they kept their target interest rate in the same range. They announce this at a press conference with a Q&A afterwards. Here's a video , and here's a transcript of the official statement . (Note that the video is one of those live event thingies where they just put the camera on and let it run ... so it's almost 2 hours long, but the speaker (Chairperson Jerome Powell) doesn't even come out until about the 59 minute mark). Those statements are super carefully worded because a lot of money is riding on potential interest rate changes; i
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Section V Extra Credit Posts

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All of these will be part of a video I will post here soon. The following is optional. I mentioned that there are still memes being made about that cuneiform complaint tablet, and here's an xkcd comic from the other day (sing it to the tune "My Favorite Things" from The Sound of Music).
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Section IV Extra Credit Posts for Spring 2023

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March 31 There have been many rumors around that the banking problem this month have come through social media, with Twitter often accused. Congress seems quite interested in pursuing this avenue. Meanwhile, Bloomberg reports that it wasn't (open) social media that was the problem, but rather (closed) thing like chat rooms, What'sApp groups, and old-fashioned phone calls. Check out " SVB’s Demise Swirled on Private VC, Founder Networks Before Hitting Twitter " for interviews with people who were caught up in this new type of bank run. March 29 No, it's not normal for me to be doing so much about a banking crisis in 2020, but it is the big macroeconomic news lately. This week we're learning that FDIC had finally found a buyer for the American portion of Silicon Valley Bank (SVB). Emphasizing again, when banks go bankrupt, the money isn't lost (usually), but rather is in the form of other assets that aren't as liquid. So FDIC is usually looking for a buy
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Section III Extra Credit Posts for Spring 2023

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For March 10 Holy crap (yes, that's the technical term for it). There's been a bank run ... right at the time I'm covering bank runs in class.  This is a still developing story, so expect more posts about this. In fact, many news sites are running live updates on the topic, which some of you may enjoy following. On Friday, SVB, the 18th largest bank in the country was shut down after being driven into bankruptcy by mass withdrawals. Digression: international students will be shocked to learn, and domestic students should learn, that the U.S. has a highly decentralized banking system, composed of thousands of small banks. In fact, "big" American banks are often quite small compared to those in many other countries. This is probably a good thing: it helps spread out risk. Anyway, problems with SVB apparently started appearing early last week (I missed it too). By Thursday, there were mass withdrawals, and on Friday the state of California shut them down, and handed
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