In a continuing effort to provide words of wisdom from beyond the walls of Zacks, here are a few things that I think people should find to be interesting. The views expressed in the articles are not always shared by either myself or Zacks, but I do find them thought-provoking.
Debt Ceiling May Come Crashing Down
Bruce Bartlett, columnist for the Fiscal Times and former staffer for GOP Congressmen Jack Kemp and Ron Paul, writes about just how irresponsible it would be not to pass an increase in the debt ceiling and gives a bit of a timeline on when things really start to bite.
I fully agree that not raising it would be absolute insanity, and for that reason I expect that Congress will eventually come to its senses and pass it, although it will make for lots of good drama and grandstanding before it actually happens. Actually, I think it would be an even better idea to do away with the debt ceiling entirely rather than just raising it, as it really serves no useful purpose.
Brad DeLong, a Professor at UC-Berkley and former economic advisor to President Clinton, suggests that just a little bit more inflation would be a good thing, not a disaster. This post is a nice easy to understand explanation of how monetary policy works, both under normal circumstances and in the current unusual situation where we are at the zero bound and thus stuck in a liquidity trap.
I continue to be amazed at the current obsession over inflation and keeping it super low and the indifference policy makers seem to have about very high levels of unemployment. I would not go so far as to say that higher inflation would be a good thing, but I would happily trade 4% core inflation for 6% unemployment versus the current situation of 1.2% core inflation and 9.0% unemployment.
8 Facts and 3 Thoughts About Social Security
Ezra Klein of the Washington Post lays out the facts about Social Security. They are in sharp contrast to what people like former Senator and Deficit commission co-chair Alan Simpson has been saying about Social Security. (see this article for more). When discussing important programs like Social Security, it is important to have your facts right, something that is increasingly rare in public discussions these days, even (especially?) by those who should be in a position to know them, like co-chairs of deficit commissions.
The Job Delusion: Growth is Just Around the Corner
Mark Thoma, a Professor of Economics at the University of Oregon argues that the best thing we could do to solve the long-term budget deficit is to bring down the unemployment rate. The current extremely high rate of long-term unemployment risks people dropping out of the workforce permanently and thus raising costs and reducing tax revenues not only now, but far into the future.
Yes it might require spending a bit more now, and thus increasing the short-term deficit, but that investment will pay big dividends over the long run. I fully agree.
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