American Macroeconomics, 1960-2012
1. The Major Viewpoints (see my previous post)
2. Targets, Instruments, Indicators, Patterns, and Stories (introduces key macroeconomic data and standard interpretations for 1960-2007; Benjamin Friedman meets Edward Leamer)
3. The Hicks-Friedman 70’s textbook synthesis. IS-LM and AS-AD in all their glory (but I hope to do this without diagrams).
4. Why macroeconomists would be better off as historians than as physicists. Causal density makes it unwise to try to draw firm conclusions. At a theoretical level, The textbook diagrams make it appear as if macroeconomic variables are stable and path-independent. Yet the Great Stagflation and the Financial Crisis Aftermath seem to represent “phase changes” or “regime shifts,” at least compared to prior experience and expectations, and macroeconomic variables exhibit obvious path-dependency. Turning from theory to empirics, we do not have controlled experiments available to us. Statistically, we cannot view macroeconomic data as consisting of repetitive trials coming from a common environment.
5. How I experienced the 1970s convulsion. Follow me as I enter Swarthmore college in 1971, learn 1960s Keynesian macro, and proceed to see what I have learned fall apart in just a few years.
6. The Many Descendants of Robert E. Lucas, Jr. and Stanley Fischer. How the macroeconomics profession became narrow, inbred, and retarded.
7. The Dirty Laundry Hidden in the 1970s Textbook Model. Problems include: the unspecified connection between short-term nominal interest rates and long-term real rates; the hypothesis of sticky nominal wages is asked to carry a very heavy load; money has close substitutes both as an asset and as a transaction medium; the paradoxical relationship between money demand, the price level, and inflation
8. The Financial Crisis and its Aftermath. Are any of the pre-2000 viewpoints adequate? What about the post-2000 viewpoints?
You just may be creating the text that should be required pre-reading before admission to any macro course.
As you write your book, please consider that on Tuesday, August 6, 2013, the world passed through peak prosperity, and peak stock wealth, as all forms of wealth, Gold, GLD, Silver, SLV, Commodities, DBC, World Stocks, VT, Major World Currencies, DBV, Emerging Market Currencies, CEW, and Credit, AGG, traded lower, as the Interest Rate on the US Ten Year Note, ^TNX, traded higher to 2.64%, on the exhaustion of the world central banks’ monetary authority.
Thus, an Elliott Wave 5 High was attained the week ending August 2, 2013, in World Stocks, VT, the S&P 500, SPY, the Russell 2000, IWM, Global Producers, FXR, Small Cap Pure Value Stocks, RZV, Dividend Growth, VIG, and a whole host of other ETFs; and an Elliot Wave 2 High was attained in Utility Stocks, XLU, and Global Utilities, DBU.
What Doug Noland of Prudent Bear terms The Global Government Finance Bubble, has burst. Hyman P. Minsky identified five stages of the Credit Cycle, displacement, boom, euphoria, profit taking and panic; the profit taking stage has been reached, and the panic stage is coming very soon.
The Business Cycle, specifically the Austrian Business Cycle, and the Kondratieff Cycle, is complete as nation states are no longer sovereign governors of economic and political activity, and are unable to provide seigniorage, that is moneyness, to investor’s choice of investments, currencies and credit, which featured a moral hazard based prosperity.
The Milton Friedman Free to Choose banker regime is no longer able to support Liberalism’s policy of investment choice, and its credit schemes, such as the debt trade of junk bond investing, JNK, and the currency carry trade of Eurozone investing, EUR/JPY, and the safe haven trade in US Banks, KRE, and the credit responsive US Small Caps, IWM, as the monetary policies of the world central banks, especially those of Ben Bernanke of the US Federal Reserve, have crossed the Rubicon of sound monetary policy, and have turned “money good” investments bad, as evidenced by the failure of Treasury Bonds, BWX, at the hand of bond vigilantes, calling interest rates higher, as well as the failure of currencies, such as the Indian Rupe, ICN, and the Brazilian Real, BZF, in ongoing competitive currency devaluation, at the hands of currency traders, selling currencies short.
With the failure of all forms of fiat wealth on August 6, 2013, Jesus Christ, acting at the helm of the Economy of God, that is in Dispensation, seen in Ephesians 1:10, has pivoted the world from the paradigm of Liberalism into the paradigm of Authoritarianism.
The Beast Regime of regional governance and totalitarian collectivism, seen in Revelation 13:1-4, is now rising as the sovereign governor of economic and political activity, and to provide seigniorage, that is moneyness, to nannycrats and their regional statist rule over the factors of production, enforcing Authoritarianism’s policies of diktat, and schemes of debt servitude, establishing austerity over all of mankind.
I think you’ve crafted a marvelous title, or sub-title to your book – the second sentence of your chapter 6, ” How the macroeconomics profession became narrow, inbred, and retarded.”
I’ve been waiting for you to expand into book form your PSST idea. Is this “The PSST Book” or is this the book before “The PSST Book”?
Did u have a chance to read the works William Hutt? I am almost done with The Keynesian Episode which offers hmm quite convincing classical perspective on the Great Depression…