EconAir

There is a story, possibly true, that when the British surrendered to American and French forces at Yorktown, effectively ending British rule of America, someone in the British army sang or played an old English folk song, “The World Turned Upside Down.”    (See https://en.wikipedia.org/wiki/The_World_Turned_Upside_Down ) I think I know how the British felt.   Many of the assumptions economists have made about economic reality and economic policies now seem out-of-date or even reversed. UNITED STATES The Fed fought inflation; now it sets inflation targets when there is no inflation. The Fed worries about deflation even though the major source is a fall in energy and commodity prices. Another source is the fall in the prices of technology products. There is a large increase in the money supply, large government deficits, a large trade deficit, and a large decrease in the unemployment rate. Economic theory and past experience says that there should...

Janet in Wonderland Anyone who believes that financial markets are rational is not looking at the current government bond markets.    The U.S. 10-year government bond is paying around 2.5%.    Believe it or not, the 10-year Spanish government bond is paying less.   The German 10-year government bond is paying a little over 1%, less than a 2-year U.S. bond. If you were not a finance major, skip this paragraph.   The yield curve is incredibly flat.   It is only this way because the Fed hasn’t realized yet the Great Recession has been over for five years.   More sinister explanations rely on conspiracy theories.   When given the choice, I always go with stupidity. According to CNBC (yes, I’m still addicted to my financial soap opera), the interest rates on German and Spanish 10-year bonds are at a 200-year low.   I don’t know how they know that.   Germany didn’t exist 200 years ago but Prussian war bonds probably did. ...

  Strategic and Tactical Planning For thirteen years, I was a corporate economist and a corporate planner manager for three Fortune 500 companies.   I discovered that I could do my job as a corporate economist while ignoring all but the simplest of economic concepts.   As a corporate planner, I learned that the planning processes of large corporations were, at best, mostly a waste of time and resources, and at worst, contributed to the relative demise of the companies.   Of the three companies I worked for, one has been sold three times, one has gone through a bankruptcy, and the other merged with (actually sold to) A Brazilian company.   This is becoming typical; the failure rate of large corporations is accelerating. Other disciplines in business are no better.   Marketing is still based on ideas, usually summarized by the four P’s, that are a formula for stagnation at best and decline at worst.   Mass-media advertising, born at the beginn...