By the narrowest margin ever the Senate has confirmed Janet Yellen to head the Federal Reserve. She will be the first female Fed boss, but that’s not the news. As the New York Times put it, Yellen is “an influential proponent of the Fed’s extraordinary measures to revive the economy.” She told the Times…
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In a NBER working paper, Martin Feldstein argues that the Euro “should now be recognized as an experiment that has led to the sovereign debt crisis in several countries, the fragile condition of major European banks, the high levels of unemployment, and the large trade deficits that now exist in most Eurozone countries.” The…
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Gertrude Chavez-Dreyfuss at Reuters reports in “Dollar tumbles to 3-yr low; data underpins rate view” that: The dollar slumped to a three-year low against major currencies on Wednesday and its outlook darkened further as surprisingly soft economic data underpinned expectations that U.S. interest rates will remain low this year. The greenback also fell to…
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Bloomberg BusinessWeek has identified the biggest risk in continuing today’s levels of deficit spending for the U.S. government: Barack Obama may lose the advantage of low borrowing costs as the U.S. Treasury Department says what it pays to service the national debt is poised to triple amid record budget deficits. Interest expense will rise…
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Susanne Walker reports at Bloomberg that because of fears of inflation created by the enormous credit expansion by the Federal Reserve and rapidly increasing U.S. government deficit spending, the world’s biggest bond fund at Pacific Investment Management Company (Pimco) has dropped all U.S. government debt from its portfolio. Bill Gross, who runs the world’s…
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Is the title of a new working paper by Peter Boettke and Chris Coyne of George Mason University. The abstract of the paper reads: Writing over 230 years ago, Adam Smith noted the ‘juggling trick’ whereby governments hide the extent of their public debt through ‘pretend payments.’ As the fiscal crises around the world…
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Ken Rogoff on rising gold prices and public debt: “At $1,300, today’s price is probably more than double very long-term, inflation-adjusted, average gold prices. So what could justify another huge increase in gold prices from here? “One answer, of course, is a complete collapse of the U.S. dollar. With soaring deficits, and a rudderless…
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