Greg Mankiw seems to have gotten it exactly Right, and that worries me. That is not to say Greg ever gets very much Wrong. It only states that I have an idiotic sketch which portrays a 77% Inflation rate for the Money Supply that the Fed has produced, and the Fed has to get not very much Wrong in order for that Inflation not to show up. I have to now ask if Everyone is that Gifted, and I hear an echoing laughter from the Past. I almost wish that they had authorized a potential Tax on Bank reserves, while they had passed provision for the Fed paying Interest on those reserves. I specifically do not like the fact that the Banks can earn Money whether We are in a Recession or a Boom; through the simple practice of buying Treasuries. Ease of paying for Government excesses hint of older practices of printing Currency to pay for Government; with the horrible suspicion We are talking about the same thing!
Julian Zelizer mistrusts the impressions of the American Public, which I myself feel are truly far off the Mark. This is basically because Americans listen to the Propaganda of the military/industrial complex as expounded by Presidents, rather than the justified worries of military strategists. We have too much Money spent on Intelligence capacity and super-weapons, with insufficient funds granted to the maintenance of a viable military force. This concentration means We have difficulty stabilizing parity with other military forces in the World. Our present military force could not set up for an extended military campaign against a determined enemy of significant size, without massive alteration of organization. I would suggest that the US Military today expresses the persistence capacity on a par with the British Army in 1914. Once the professional reserves were destroyed in 1914-15, the British has to really scramble to feed the Manpower needs of the War. Today, the loss of two of Our functioning divisions–even if only Casualties–and/or 1000 Combat air hours upon our aircraft, would mean a scramble to maintain an effective military posture. Neither Republicans or Democrats are truly Hawks, though they are Vote-gathering automatons.
I will maintain the pretense of sharp economic analysis, by presenting this Post from Menzie Chinn. I will first say that I do not believe these models very much, though they are carefully done. The basic reason being these models are all dependent upon functions with coefficients determined by functions with inline shrinkable values. This means that the final Readouts are not the expression of general Trends, but the interplay of general Trends; all final outcomes inconsistent for growth or expansion (no consistent direction). Expectations are always overconfident under these terms, especially when interaction of Trends lead to component shortages and Time delays. Q42010 may get Us a 1% Growth rate, but We are running against Constraints of Resource competition and loss of experienced Operatives with the retirement of the Baby Boomers from decisive management positions. This is not to say that many of Us should not have been replaced earlier, yet; many good Operators will be hitting the Skids in the next decade. lgl