Fiscal Policy

Three Years Behind The Curve Too Late Federal Open Market Committee (FOMC) Increases Target Federal Funds Rate to .75-1.0% — Financial Repression of Savers Slowly Continues — Videos

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Yellen Calms Fears Fed’s Policy Trigger Finger Is Getting Itchy

March 15, 2017, 1:00 PM CDT March 15, 2017, 5:02 PM CDT
  • Policy makers still project three total rate hikes for 2017
  • FOMC sticks with ‘gradual’ plan for removing accommodation

Fed Raises Benchmark Lending Rate a Quarter Point

Federal Reserve Chair Janet Yellen sought to reassure investors that the central bank’s latest interest-rate increase wasn’t a paradigm shift to a trigger-happy policy driven by fears of faster inflation.

Speaking to reporters after the Fed’s quarter percentage-point move on Wednesday, Yellen said the central bank was willing to tolerate inflation temporarily overshootingits 2 percent goal and that it intended to keep its policy accommodative for “some time.”

“The simple message is the economy’s doing well. We have confidence in the robustness of the economy and its resilience to shocks,” she said.

As a result, the Fed is sticking with its policy of gradually raising interest rates, Yellen said. In their first forecasts in three months, Fed policy makers penciled in two more quarter-point rate increases this year and three in 2018, unchanged from their projections in December.

Today’s decision “does not represent a reassessment of the economic outlook or of the appropriate course for monetary policy,” the Fed chief said.

Speculation of a more aggressive Fed had mounted in recent days after a host of central bank officials, including Yellen herself, went out of their way to telegraph to financial markets that a rate hike was imminent. The expectations were further fueled by news of rising inflation.

Stocks Advance

Stocks rose and bond yields fell as investors viewed the statement from the Federal Open Market Committee and Yellen’s remarks afterward as a sign that the Fed isn’t in a hurry to remove monetary stimulus. The FOMC raised the target range for the federal funds rate to 0.75 percent to 1 percent, as expected, but Yellen’s lack of urgency to snuff out inflation was a surprise.

R.J. Gallo, a fixed-income investment manager at Federated Investors in Pittsburgh, said the chorus of Fed speakers before this meeting led investors to expect a move up in the number of projected rate hikes this year, and even upgrades by Fed officials in the levels of inflation and growth they anticipated.

None of that materialized.

“You didn’t get any of those things,” Gallo said, which explains why Treasury yields quickly dropped after the Fed released the FOMC statement and a new set of economic projections. “The expectation that Fed was getting more hawkish had to come out of the market.”

The U.S. economy has mostly met the central bank’s goals of full employment and stable prices, and may get further support if President Donald Trump delivers promised fiscal stimulus. Investor and business confidence has soared since Trump won the presidency in November, buoyed by his vows to cut taxes, lift infrastructure spending and ease regulations.

Still, the data don’t show an economy that’s heating up rapidly — a point Yellen herself made after the third rate hike since the 2007-2009 recession ended. In fact, the economy may have “more room to run,” she said.

Stronger business and consumer confidence hasn’t yet translated into increased investment and spending, said Yellen.

“It’s uncertain just how much sentiment actually impacts spending decisions, and I wouldn’t say at this point that I have seen hard evidence of any change in spending decisions,” said the Fed Chair. “Most of the business people that we’ve talked to also have a wait-and-see attitude.”

Retail sales in February grew at the slowest pace since August, a government report showed earlier Wednesday. The Atlanta Fed’s model for GDP predicts an expansion of 0.9 percent in the first quarter, less than a third the pace Trump is aiming for.

Fiscal Stimulus

Asked about the potential for a fiscal boost, Yellen made clear the Fed is still waiting for more concrete policy plans to emerge from the Trump administration before adapting monetary policy in reaction.

“There is great uncertainty about the timing, the size and the character of policy changes that may be put in place,” Yellen said. “I don’t think that’s a decision or set of decisions that we need to make until we know more about what policy changes will go into effect.”

Yellen disputed suggestions that the Fed was on a collision course with the Trump administration over its plans to foster faster economic growth through tax cuts and deregulation. “We would welcome stronger economic growth in the context of price stability,” she said.

She said she had met Trump briefly and had gotten together a couple of times with Treasury Secretary Steven Mnuchin to discuss the economy and financial regulation.

Further underscoring their lack of urgency, Fed officials repeated a commitment to maintain their balance-sheet reinvestment policy until rate increases were well under way. Yellen said officials had discussed the process of reducing the balance sheet gradually, but had made no decisions and would continue to debate the topic.

Policy makers forecast inflation will reach 1.9 percent in the fourth quarter this year, and 2 percent in both 2018 and 2019, according to quarterly median estimates released with the FOMC statement. The Fed’s preferred measure of inflation rose 1.9 percent in the 12 months through January, just shy of its target.

Yellen pointed out, though, that core inflation continues to run somewhat further below 2 percent. That rate, which strips out food and energy costs, stood at 1.7 percent in January. The Fed’s new forecast for the core rate at the end of this year edged up to 1.9 percent, from 1.8 percent in December.

“The committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal,” the Fed said. Discussing the word symmetric in the statement, Yellen said during her press conference that the Fed was not shooting to push inflation over 2 percent but recognized that it could temporarily go above it. Two percent is a target, she reiterated, not a ceiling.

https://www.bloomberg.com/news/articles/2017-03-15/fed-raises-benchmark-rate-as-inflation-approaches-2-target

Changes in the federal funds rate will always affect the U.S. dollar. When the Federal Reserve increases the federal funds rate, it normally reduces inflationary pressure and works to appreciate the dollar.

Since June 2006, however, the Fed has maintained a federal funds rate of close to 0%. In the wake of the 2008 financial crisis, the federal funds rate fluctuated between 0-0.25%, and is now 0.75%.

The Fed used this monetary policy to help achieve maximum employment and stable prices. Now that the 2008 financial crisis has largely subsided, the Fed will look to increase interest rates to continue to achieve employment and to stabilize prices.

Inflation of the U.S. Dollar

The best way to achieve full employment and stable prices is to set the inflation rate of the dollar at 2%. In 2011, the Fed officially adopted a 2% annual increase in the price index for personal consumption expenditures as its target. When the economy is weak, inflation naturally falls; when the economy is strong, rising wages increase inflation. Keeping inflation at a growth rate of 2% helps the economy grow at a healthy rate.

Adjustments to the federal funds rate can also affect inflation in the United States. The Fed controls the economy by increasing interest rates when the economy is growing too fast. This encourages people to save more and spend less, reducing inflationary pressure. Conversely, when the economy is in a recession or growing too slowly, the Fed reduces interest rates to stimulate spending, which increases inflation.

During the 2008 financial crisis, the low federal funds rate should have increased inflation. Over this period, the federal funds rate was set near 0%, which encouraged spending and would normally increase inflation.

However, inflation is still well below the 2% target, which is contrary to the normal effects of low interest rates. The Fed cites one-off factors, such as falling oil prices and the strengthening dollar, as the reasons why inflation has remained low in a low interest environment.

The Fed believes that these factors will eventually fade and that inflation will increase above the target 2%. To prevent this eventual increase in inflation, hiking the federal funds rate reduces inflationary pressure and cause inflation of the dollar to remain around 2%.

Appreciation of the U.S. Dollar

Increases in the federal funds rate also result in a strengthening of the U.S. dollar. Other ways that the dollar can appreciate include increases in average wages and increases in overall consumption. However, although jobs are being created, wage rates are stagnant.

Without an increase in wage rates to go along with a strengthening job market, consumption won’t increase enough to sustain economic growth. Additionally, consumption remains subdued due to the fact that the labor force participation rate was close to its 35-year low in 2015. The Fed has kept interest rates low because a lower federal funds rate supports business expansions, which leads to more jobs and higher consumption. This has all worked to keep appreciation of the U.S. dollar low.

However, the U.S. is ahead of the other developed markets in terms of its economic recovery. Although the Fed raises rates cautiously, the U.S. could see higher interest rates before the other developed economies.

Overall, under normal economic conditions, increases in the federal funds rate reduce inflation and increase the appreciation of the U.S. dollar.

http://www.investopedia.com/articles/investing/101215/how-fed-fund-rate-hikes-affect-us-dollar.asp

Financial repression

From Wikipedia, the free encyclopedia
Not to be confused with economic repression, a type of political repression.

Financial repression refers to “policies that result in savers earning returns below the rate of inflation” in order to allow banks to “provide cheap loans to companies and governments, reducing the burden of repayments”.[1] It can be particularly effective at liquidating government debt denominated in domestic currency.[2] It can also lead to a large expansions in debt “to levels evoking comparisons with the excesses that generated Japan’s lost decade and the Asian financial crisis” in 1997.[1]

The term was introduced in 1973 by Stanford economists Edward S. Shaw and Ronald I. McKinnon[3][4] in order to “disparage growth-inhibiting policies in emerging markets“.

Mechanism

Financial repression consists of the following:[5]

  1. Explicit or indirect capping of interest rates, such as on government debt and deposit rates (e.g., Regulation Q).
  2. Government ownership or control of domestic banks and financial institutions with barriers that limit other institutions from entering the market.
  3. High reserve requirements.
  4. Creation or maintenance of a captive domestic market for government debt, achieved by requiring banks to hold government debt via capital requirements, or by prohibiting or disincentivising alternatives.
  5. Government restrictions on the transfer of assets abroad through the imposition of capital controls.

These measures allow governments to issue debt at lower interest rates. A low nominal interest rate can reduce debt servicing costs, while negative real interest rates erodes the real value of government debt.[5] Thus, financial repression is most successful in liquidating debts when accompanied by inflation and can be considered a form of taxation,[6] or alternatively a form of debasement.[7]

The size of the financial repression tax for 24 emerging markets from 1974 to 1987. Their results showed that financial repression exceeded 2% of GDP for seven countries, and greater than 3% for five countries. For five countries (India, Mexico, Pakistan, Sri Lanka, and Zimbabwe) it represented approximately 20% of tax revenue. In the case of Mexico financial repression was 6% of GDP, or 40% of tax revenue.[8]

Financial repression is categorized as “macroprudential regulation“—i.e., government efforts to “ensure the health of an entire financial system.[2]

Examples

After World War II

Financial repression “played an important role in reducing debt-to-GDP ratios after World War II” by keeping real interest rates for government debt below 1% for two-thirds of the time between 1945 and 1980, the United States was able to “inflate away” the large debt (122% of GDP) left over from the Great Depression and World War II.[2] In the UK, government debt declined from 216% of GDP in 1945 to 138% ten years later in 1955.[9]

China

China‘s economic growth has been attributed to financial repression thanks to “low returns on savings and the cheap loans that it makes possible”. This has allowed China to rely on savings-financed investments for economic growth. However, because low returns also dampens consumer spending, household expenditures account for “a smaller share of GDP in China than in any other major economy”.[1] However, as of December 2014, the People’s Bank of China “started to undo decades of financial repression” and the government now allows Chinese savers to collect up to a 3.3% return on one-year deposits. At China’s 1.6% inflation rate, this is a “high real-interest rate compared to other major economies”.[1]

After the 2008 economic recession

In a 2011 NBER working paper, Carmen Reinhart and Maria Belen Sbrancia speculate on a possible return by governments to this form of debt reduction in order to deal with high debt levels following the 2008 economic crisis.[5]

“To get access to capital, Austria has restricted capital flows to foreign subsidiaries in central and eastern Europe. Select pension funds have also been transferred to governments in France, Portugal, Ireland and Hungary, enabling them to re-allocate toward sovereign bonds.”[10]

Criticism

Critics[who?] argue that if this view was true, investors (i.e., capital-seeking parties) would be inclined to demand capital in large quantities and would be buying capital goods from this capital. This high demand for capital goods would certainly lead to inflation and thus the central banks would be forced to raise interest rates again. As a boom pepped by low interest rates fails to appear these days in industrialized countries, this is a sign that the low interest rates seem to be necessary to ensure an equilibrium on the capital market, thus to balance capital-supply—i.e., savers—on one side and capital-demand—i.e., investors and the government—on the other. This view argues that interest rates would be even lower if it were not for the high government debt ratio (i.e., capital demand from the government).

Free-market economists argue that financial repression crowds out private-sector investment, thus undermining growth. On the other hand, “postwar politicians clearly decided this was a price worth paying to cut debt and avoid outright default or draconian spending cuts. And the longer the gridlock over fiscal reform rumbles on, the greater the chance that ‘repression’ comes to be seen as the least of all evils”.[11]

Also, financial repression has been called a “stealth tax” that “rewards debtors and punishes savers—especially retirees” because their investments will no longer generate the expected return, which is income for retirees.[10][12] “One of the main goals of financial repression is to keep nominal interest rates lower than they would be in more competitive markets. Other things equal, this reduces the government’s interest expenses for a given stock of debt and contributes to deficit reduction. However, when financial repression produces negative real interest rates (nominal rates below the inflation rate), it reduces or liquidates existing debts and becomes the equivalent of a tax—a transfer from creditors (savers) to borrowers, including the government.”[2]

See also

Reform:

General:

References

  1. ^ Jump up to:a b c d “China Savers Prioritized Over Banks by PBOC”. Bloomberg. November 25, 2014.
  2. ^ Jump up to:a b c d Carmen M. Reinhart, Jacob F. Kirkegaard, and M. Belen Sbrancia, “Financial Repression Redux”, IMF Finance and Development, June 2011, p. 22-26
  3. Jump up^ Shaw, Edward S. Financial Deepening in Economic Development. New York: Oxford University Press, 1973
  4. Jump up^ McKinnon, Ronald I. Money and Capital in Economic Development. Washington, D.C.: Brookings Institution, 1973
  5. ^ Jump up to:a b c Carmen M. Reinhart and M. Belen Sbrancia, “The Liquidation of Government Debt”, IMF, 2011, p. 19
  6. Jump up^ Reinhart, Carmen M. and Rogoff, Kenneth S., This Time is Different: Eight Centuries of Financial Folly. Princeton and Oxford: Princeton University Press, 2008, p. 143
  7. Jump up^ Bill Gross, “The Caine Mutiny Part 2”, PIMCO
  8. Jump up^ Giovannini, Alberto and de Melo, Martha, “Government Revenue from Financial Repression”, The American Economic Review, Vol. 83, No. 4 Sep. 1993 (pp. 953-963)
  9. Jump up^ “The great repression”. The Economist. 16 June 2011.
  10. ^ Jump up to:a b “Financial Repression 101”. Allianz Global Investors. Retrieved 2 December 2014.
  11. Jump up^ Gillian Tett, “Policymakers learn a new and alarming catchphrase”, Financial Times, May 9, 2011
  12. Jump up^ Amerman, Daniel (September 12, 2011). “The 2nd Edge of Modern Financial Repression: Manipulating Inflation Indexes to Steal from Retirees & Public Wor

https://en.wikipedia.org/wiki/Financial_repression

Federal funds rate

From Wikipedia, the free encyclopedia

10 year treasury compared to the Federal Funds Rate

Federal funds rate and capacity utilization in manufacturing.

In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight, on an uncollateralized basis. Reserve balances are amounts held at the Federal Reserve to maintain depository institutions’ reserve requirements. Institutions with surplus balances in their accounts lend those balances to institutions in need of larger balances. The federal funds rate is an important benchmark in financial markets.[1][2]

The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.

The federal funds target rate is determined by a meeting of the members of the Federal Open Market Committee which normally occurs eight times a year about seven weeks apart. The committee may also hold additional meetings and implement target rate changes outside of its normal schedule.

The Federal Reserve uses open market operations to influence the supply of money in the U.S. economy[3] to make the federal funds effective rate follow the federal funds target rate.

Mechanism

Financial Institutions are obligated by law to maintain certain levels of reserves, either as reserves with the Fed or as vault cash. The level of these reserves is determined by the outstanding assets and liabilities of each depository institution, as well as by the Fed itself, but is typically 10%[4] of the total value of the bank’s demand accounts (depending on bank size). In the range of $9.3 million to $43.9 million, for transaction deposits (checking accounts, NOWs, and other deposits that can be used to make payments) the reserve requirement in 2007-2008 was 3 percent of the end-of-the-day daily average amount held over a two-week period. Transaction deposits over $43.9 million held at the same depository institution carried a 10 percent reserve requirement.

For example, assume a particular U.S. depository institution, in the normal course of business, issues a loan. This dispenses money and decreases the ratio of bank reserves to money loaned. If its reserve ratio drops below the legally required minimum, it must add to its reserves to remain compliant with Federal Reserve regulations. The bank can borrow the requisite funds from another bank that has a surplus in its account with the Fed. The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.

The nominal rate is a target set by the governors of the Federal Reserve, which they enforce by open market operations and adjusting the interest paid on required and excess reserve balances. That nominal rate is almost always what is meant by the media referring to the Federal Reserve “changing interest rates.” The actual federal funds rate generally lies within a range of that target rate, as the Federal Reserve cannot set an exact value through open market operations.

Another way banks can borrow funds to keep up their required reserves is by taking a loan from the Federal Reserve itself at the discount window. These loans are subject to audit by the Fed, and the discount rate is usually higher than the federal funds rate. Confusion between these two kinds of loans often leads to confusion between the federal funds rate and the discount rate. Another difference is that while the Fed cannot set an exact federal funds rate, it does set the specific discount rate.

The federal funds rate target is decided by the governors at Federal Open Market Committee (FOMC) meetings. The FOMC members will either increase, decrease, or leave the rate unchanged depending on the meeting’s agenda and the economic conditions of the U.S. It is possible to infer the market expectations of the FOMC decisions at future meetings from the Chicago Board of Trade (CBOT) Fed Funds futures contracts, and these probabilities are widely reported in the financial media.

Applications

Interbank borrowing is essentially a way for banks to quickly raise money. For example, a bank may want to finance a major industrial effort but may not have the time to wait for deposits or interest (on loan payments) to come in. In such cases the bank will quickly raise this amount from other banks at an interest rate equal to or higher than the Federal funds rate.

Raising the federal funds rate will dissuade banks from taking out such inter-bank loans, which in turn will make cash that much harder to procure. Conversely, dropping the interest rates will encourage banks to borrow money and therefore invest more freely.[5] This interest rate is used as a regulatory tool to control how freely the U.S. economy operates.

By setting a higher discount rate the Federal Bank discourages banks from requisitioning funds from the Federal Bank, yet positions itself as a lender of last resort.

Comparison with LIBOR

Though the London Interbank Offered Rate (LIBOR) and the federal funds rate are concerned with the same action, i.e. interbank loans, they are distinct from one another, as follows:

  • The target federal funds rate is a target interest rate that is set by the FOMC for implementing U.S. monetary policies.
  • The (effective) federal funds rate is achieved through open market operations at the Domestic Trading Desk at the Federal Reserve Bank of New York which deals primarily in domestic securities (U.S. Treasury and federal agencies’ securities).[6]
  • LIBOR is based on a questionnaire where a selection of banks guess the rates at which they could borrow money from other banks.
  • LIBOR may or may not be used to derive business terms. It is not fixed beforehand and is not meant to have macroeconomic ramifications.[7]

Predictions by the market

Considering the wide impact a change in the federal funds rate can have on the value of the dollar and the amount of lending going to new economic activity, the Federal Reserve is closely watched by the market. The prices of Option contracts on fed funds futures (traded on the Chicago Board of Trade) can be used to infer the market’s expectations of future Fed policy changes. Based on CME Group 30-Day Fed Fund futures prices, which have long been used to express the market’s views on the likelihood of changes in U.S. monetary policy, the CME Group FedWatch tool allows market participants to view the probability of an upcoming Fed Rate hike. One set of such implied probabilities is published by the Cleveland Fed.

Historical rates

As of December 16, 2008, the most recent change the FOMC has made to the funds target rate is a 75 to 100 basis point cut from 1.0% to a range of zero to 0.25%. According to Jack A. Ablin, chief investment officer at Harris Private Bank, one reason for this unprecedented move of having a range, rather than a specific rate, was because a rate of 0% could have had problematic implications for money market funds, whose fees could then outpace yields.[8] This followed the 50 basis point cut on October 29, 2008, and the unusually large 75 basis point cut made during a special January 22, 2008 meeting, as well as a 50 basis point cut on January 30, 2008, a 75 basis point cut on March 18, 2008, and a 50 basis point cut on October 8, 2008.[9]

Federal funds rate history and recessions.png

Explanation of federal funds rate decisions

When the Federal Open Market Committee wishes to reduce interest rates they will increase the supply of money by buying government securities. When additional supply is added and everything else remains constant, price normally falls. The price here is the interest rate (cost of money) and specifically refers to the Federal Funds Rate. Conversely, when the Committee wishes to increase the Fed Funds Rate, they will instruct the Desk Manager to sell government securities, thereby taking the money they earn on the proceeds of those sales out of circulation and reducing the money supply. When supply is taken away and everything else remains constant, price (or in this case interest rates) will normally rise.[10]

The Federal Reserve has responded to a potential slow-down by lowering the target federal funds rate during recessions and other periods of lower growth. In fact, the Committee’s lowering has recently predated recessions,[9] in order to stimulate the economy and cushion the fall. Reducing the Fed Funds Rate makes money cheaper, allowing an influx of credit into the economy through all types of loans.

The charts linked below show the relation between S&P 500 and interest rates.

  • July 13, 1990 — Sept 4, 1992: 8.00%–3.00% (Includes 1990–1991 recession)[11][12]
  • Feb 1, 1995 — Nov 17, 1998: 6.00–4.75 [13][14][15]
  • May 16, 2000 — June 25, 2003: 6.50–1.00 (Includes 2001 recession)[16][17][18]
  • June 29, 2006 — (Oct. 29 2008): 5.25–1.00[19]
  • Dec 16, 2008 — 0.0–0.25[20]
  • Dec 16, 2015 — 0.25-0.50[21]
  • Dec 14, 2016 — 0.50-0.75[22]
  • Mar 15, 2017 — 0.75-1.00[23]

Bill Gross of PIMCO suggested that in the prior 15 years ending in 2007, in each instance where the fed funds rate was higher than the nominal GDP growth rate, assets such as stocks and/or housing fell.[24]

See also

References

  1. Jump up^ “Fedpoints: Federal Funds”. Federal Reserve Bank of New York. August 2007. Retrieved 2 October 2011.
  2. Jump up^ “The Implementation of Monetary Policy”. The Federal Reserve System: Purposes & Functions (PDF). Washington, D.C.: Federal Reserve Board. 24 August 2011. p. 4. Retrieved 2 October 2011.
  3. Jump up^ “Monetary Policy, Open Market Operations”. Federal Reserve Bank. 2008-01-30. Retrieved 2008-01-30.
  4. Jump up^ “Reserve Requirements”. Board of Governors of The Federal Reserve System. December 16, 2015.
  5. Jump up^ “Fed funds rate”. Bankrate, Inc. March 2016.
  6. Jump up^ Cheryl L. Edwards (November 1997). Gerard Sinzdak. “Open Market Operations in the 1990s” (PDF). Federal Reserve Bulletin (PDF).
  7. Jump up^ “BBA LIBOR – Frequently asked questions”. British Bankers’ Association. March 21, 2006. Archived from the original on 2007-02-16.
  8. Jump up^ “4:56 p.m. US-Closing Stocks”. Associated Press. December 16, 2008.[dead link]
  9. ^ Jump up to:a b “Historical Changes of the Target Federal Funds and Discount Rates, 1971 to present”. New York Federal Reserve Branch. February 19, 2010. Archived from the original on December 21, 2008.
  10. Jump up^ David Waring (2008-02-19). “An Explanation of How The Fed Moves Interest Rates”. InformedTrades.com. Archived from the original on 2015-05-05. Retrieved 2009-07-20.
  11. Jump up^ “$SPX 1990-06-12 1992-10-04 (rate drop chart)”. StockCharts.com.
  12. Jump up^ “$SPX 1992-08-04 1995-03-01 (rate rise chart)”. StockCharts.com.
  13. Jump up^ “$SPX 1995-01-01 1997-01-01 (rate drop chart)”. StockCharts.com.
  14. Jump up^ “$SPX 1996-12-01 1998-10-17 (rate drop chart)”. StockCharts.com.
  15. Jump up^ “$SPX 1998-09-17 2000-06-16 (rate rise chart)”. StockCharts.com.
  16. Jump up^ “$SPX 2000-04-16 2002-01-01 (rate drop chart)”. StockCharts.com.
  17. Jump up^ “$SPX 2002-01-01 2003-07-25 (rate drop chart)”. StockCharts.com.
  18. Jump up^ “$SPX 2003-06-25 2006-06-29 (rate rise chart)”. StockCharts.com.
  19. Jump up^ “$SPX 2006-06-29 2008-06-01 (rate drop chart)”. StockCharts.com.
  20. Jump up^ “Press Release”. Board of Governors of The Federal Reserve System. December 16, 2008.
  21. Jump up^ “Open Market Operations”. Board of Governors of The Federal Reserve System. December 16, 2015.
  22. Jump up^ “Decisions Regarding Monetary Policy Implementation”. Board of Governors of The Federal Reserve System.
  23. Jump up^ Cox, Jeff (2017-03-15). “Fed raises rates at March meeting”. CNBC. Retrieved 2017-03-15.
  24. Jump up^ Shaw, Richard (January 7, 2007). “The Bond Yield Curve as an Economic Crystal Ball”. Retrieved 3 April 2011.

External links

https://en.wikipedia.org/wiki/Federal_funds_rate

Monetary policy of the United States

From Wikipedia, the free encyclopedia
  (Redirected from U.S. monetary policy)
United States M2 money supply
% change in money supply
Money supply changes monthly basis

Monetary policy concerns the actions of a central bank or other regulatory authorities that determine the size and rate of growth of the money supply.

In the United States, the Federal Reserve is in charge of monetary policy, and implements it primarily by performing operations that influence short-term interest rates.

Money supply[edit]

Main article: Money supply

The money supply has different components, generally broken down into “narrow” and “broad” money, reflecting the different degrees of liquidity (‘spendability’) of each different type, as broader forms of money can be converted into narrow forms of money (or may be readily accepted as money by others, such as personal checks).[1]

For example, demand deposits are technically promises to pay on demand, while savings deposits are promises to pay subject to some withdrawal restrictions, and Certificates of Deposit are promises to pay only at certain specified dates; each can be converted into money, but “narrow” forms of money can be converted more readily. The Federal Reserve directly controls only the most narrow form of money, physical cash outstanding along with the reserves of banks throughout the country (known as M0 or the monetary base); the Federal Reserve indirectly influences the supply of other types of money.[1]

Broad money includes money held in deposit balances in banks and other forms created in the financial system. Basic economics also teaches that the money supply shrinks when loans are repaid;[2][3] however, the money supply will not necessarily decrease depending on the creation of new loans and other effects. Other than loans, investment activities of commercial banks and the Federal Reserve also increase and decrease the money supply.[4] Discussion of “money” often confuses the different measures and may lead to misguided commentary on monetary policy and misunderstandings of policy discussions.[5]

Structure of modern US institutions[edit]

Federal Reserve[edit]

Monetary policy in the US is determined and implemented by the US Federal Reserve System, commonly referred to as the Federal Reserve. Established in 1913 by the Federal Reserve Act to provide central banking functions,[6] the Federal Reserve System is a quasi-public institution. Ostensibly, the Federal Reserve Banks are 12 private banking corporations;[7][8][9] they are independent in their day-to-day operations, but legislatively accountable to Congress through the auspices of Federal Reserve Board of Governors.

The Board of Governors is an independent governmental agency consisting of seven officials and their support staff of over 1800 employees headquartered in Washington, D.C.[10] It is independent in the sense that the Board currently operates without official obligation to accept the requests or advice of any elected official with regard to actions on the money supply,[11]and its methods of funding also preserve independence. The Governors are nominated by the President of the United States, and nominations must be confirmed by the U.S. Senate.[12]

The presidents of the Federal Reserve Banks are nominated by each bank’s respective Board of Directors, but must also be approved by the Board of Governors of the Federal Reserve. The Chairman of the Federal Reserve Board is generally considered to have the most important position, followed by the president of the Federal Reserve Bank of New York.[12] The Federal Reserve System is primarily funded by interest collected on their portfolio of securities from the US Treasury, and the Fed has broad discretion in drafting its own budget,[13] but, historically, nearly all the interest the Federal Reserve collects is rebated to the government each year.[14]

The Federal Reserve has three main mechanisms for manipulating the money supply. It can buy or sell treasury securities. Selling securities has the effect of reducing the monetary base (because it accepts money in return for purchase of securities), taking that money out of circulation. Purchasing treasury securities increases the monetary base (because it pays out hard currency in exchange for accepting securities). Secondly, the discount rate can be changed. And finally, the Federal Reserve can adjust the reserve requirement, which can affect the money multiplier; the reserve requirement is adjusted only infrequently, and was last adjusted in 1992.[15]

In practice, the Federal Reserve uses open market operations to influence short-term interest rates, which is the primary tool of monetary policy. The federal funds rate, for which the Federal Open Market Committee announces a target on a regular basis, reflects one of the key rates for interbank lending. Open market operations change the supply of reserve balances, and the federal funds rate is sensitive to these operations.[16]

In theory, the Federal Reserve has unlimited capacity to influence this rate, and although the federal funds rate is set by banks borrowing and lending funds to each other, the federal funds rate generally stays within a limited range above and below the target (as participants are aware of the Fed’s power to influence this rate).

Assuming a closed economy, where foreign capital or trade does not affect the money supply, when money supply increases, interest rates go down. Businesses and consumers have a lower cost of capital and can increase spending and capital improvement projects. This encourages short-term growth. Conversely, when the money supply falls, interest rates go up, increasing the cost of capital and leading to more conservative spending and investment. The Federal reserve increases interest rates to combat Inflation.

U.S. Treasury[edit]

Private commercial banks[edit]

When money is deposited in a bank, it can then be lent out to another person. If the initial deposit was $100 and the bank lends out $100 to another customer the money supply has increased by $100. However, because the depositor can ask for the money back, banks have to maintain minimum reserves to service customer needs. If the reserve requirement is 10% then, in the earlier example, the bank can lend $90 and thus the money supply increases by only $90. The reserve requirement therefore acts as a limit on this multiplier effect. Because the reserve requirement only applies to the more narrow forms of money creation (corresponding to M1), but does not apply to certain types of deposits (such as time deposits), reserve requirements play a limited role in monetary policy.[17]

Money creation[edit]

Main article: Money creation

Currently, the US government maintains over US$800 billion in cash money (primarily Federal Reserve Notes) in circulation throughout the world,[18][19] up from a sum of less than $30 billion in 1959. Below is an outline of the process which is currently used to control the amount of money in the economy. The amount of money in circulation generally increases to accommodate money demanded by the growth of the country’s production. The process of money creation usually goes as follows:

  1. Banks go through their daily transactions. Of the total money deposited at banks, significant and predictable proportions often remain deposited, and may be referred to as “core deposits.” Banks use the bulk of “non-moving” money (their stable or “core” deposit base) by loaning it out.[20] Banks have a legal obligation to keep a certain fraction of bank deposit money on-hand at all times.[21]
  2. In order to raise additional money to cover excess spending, Congress increases the size of the National Debt by issuing securities typically in the form of a Treasury Bond[22] (see United States Treasury security). It offers the Treasury security for sale, and someone pays cash to the government in exchange. Banks are often the purchasers of these securities, and these securities currently play a crucial role in the process.
  3. The 12-person Federal Open Market Committee, which consists of the heads of the Federal Reserve System (the seven Federal governors and five bank presidents), meets eight times a year to determine how they would like to influence the economy.[23] They create a plan called the country’s “monetary policy” which sets targets for things such as interest rates.[24]
  4. Every business day, the Federal Reserve System engages in Open market operations.[25] If the Federal Reserve wants to increase the money supply, it will buy securities (such as U.S. Treasury Bonds) anonymously from banks in exchange for dollars. If the Federal Reserve wants to decrease the money supply, it will sell securities to the banks in exchange for dollars, taking those dollars out of circulation.[26][27] When the Federal Reserve makes a purchase, it credits the seller’s reserve account (with the Federal Reserve). The money that it deposits into the seller’s account is not transferred from any existing funds, therefore it is at this point that the Federal Reserve has created High-powered money.
  5. By means of open market operations, the Federal Reserve affects the free reserves of commercial banks in the country.[28] Anna Schwartz explains that “if the Federal Reserve increases reserves, a single bank can make loans up to the amount of its excess reserves, creating an equal amount of deposits”.[26][27][29]
  6. Since banks have more free reserves, they may loan out the money, because holding the money would amount to accepting the cost of foregone interest[28][30] When a loan is granted, a person is generally granted the money by adding to the balance on their bank account.[31]
  7. This is how the Federal Reserve’s high-powered money is multiplied into a larger amount of broad money, through bank loans; as written in a particular case study, “as banks increase or decrease loans, the nation’s (broad) money supply increases or decreases.”[3] Once granted these additional funds, the recipient has the option to withdraw physical currency (dollar bills and coins) from the bank, which will reduce the amount of money available for further on-lending (and money creation) in the banking system.[32]
  8. In many cases, account-holders will request cash withdrawals, so banks must keep a supply of cash handy. When they believe they need more cash than they have on hand, banks can make requests for cash with the Federal Reserve. In turn, the Federal Reserve examines these requests and places an order for printed money with the US Treasury Department.[33] The Treasury Department sends these requests to the Bureau of Engraving and Printing (to make dollar bills) and the Bureau of the Mint (to stamp the coins).
  9. The U.S. Treasury sells this newly printed money to the Federal Reserve for the cost of printing.[citation needed] This is about 6 cents per bill for any denomination.[34] Aside from printing costs, the Federal Reserve must pledge collateral (typically government securities such as Treasury bonds) to put new money, which does not replace old notes, into circulation.[35]This printed cash can then be distributed to banks, as needed.

Though the Federal Reserve authorizes and distributes the currency printed by the Treasury (the primary component of the narrow monetary base), the broad money supply is primarily created by commercial banks through the money multiplier mechanism.[29][31][36][37] One textbook summarizes the process as follows:

“The Fed” controls the money supply in the United States by controlling the amount of loans made by commercial banks. New loans are usually in the form of increased checking account balances, and since checkable deposits are part of the money supply, the money supply increases when new loans are made …[38]

This type of money is convertible into cash when depositors request cash withdrawals, which will require banks to limit or reduce their lending.[39][32] The vast majority of the broad money supply throughout the world represents current outstanding loans of banks to various debtors.[38][40][41] A very small amount of U.S. currency still exists as “United States Notes“, which have no meaningful economic difference from Federal Reserve notes in their usage, although they departed significantly in their method of issuance into circulation. The currency distributed by the Federal Reserve has been given the official designation of “Federal Reserve Notes.”[42]

Significant effects[edit]

Main article: Monetary policy

In 2005, the Federal Reserve held approximately 9% of the national debt[43] as assets against the liability of printed money. In previous periods, the Federal Reserve has used other debt instruments, such as debt securities issued by private corporations. During periods when the national debt of the United States has declined significantly (such as happened in fiscal years 1999 and 2000), monetary policy and financial markets experts have studied the practical implications of having “too little” government debt: both the Federal Reserve and financial markets use the price information, yield curve and the so-called risk free rate extensively.[44]

Experts are hopeful that other assets could take the place of National Debt as the base asset to back Federal Reserve notes, and Alan Greenspan, long the head of the Federal Reserve, has been quoted as saying, “I am confident that U.S. financial markets, which are the most innovative and efficient in the world, can readily adapt to a paydown of Treasury debt by creating private alternatives with many of the attributes that market participants value in Treasury securities.”[45] In principle, the government could still issue debt securities in significant quantities while having no net debt, and significant quantities of government debt securities are also held by other government agencies.

Although the U.S. government receives income overall from seigniorage, there are costs associated with maintaining the money supply.[41][46] Leading ecological economist and steady-state theorist Herman Daly, claims that “over 95% of our [broad] money supply [in the United States] is created by the private banking system (demand deposits) and bears interest as a condition of its existence,”[41] a conclusion drawn from the Federal Reserve’s ultimate dependence on increased activity in fractional reserve lending when it exercises open market operations.[47]Economist Eric Miller criticizes Daly’s logic because money is created in the banking system in response to demand for the money,[48] which justifies cost.[citation needed]

Thus, use of expansionary open market operations typically generates more debt in the private sector of society (in the form of additional bank deposits).[49] The private banking system charges interest to borrowers as a cost to borrow the money.[3][31][50] The interest costs are borne by those that have borrowed,[3][31] and without this borrowing, open market operations would be unsuccessful in maintaining the broad money supply,[30] though alternative implementations of monetary policy could be used. Depositors of funds in the banking system are paid interest on their savings (or provided other services, such as checking account privileges or physical security for their “cash”), as compensation for “lending” their funds to the bank.

Increases (or contractions) of the money supply corresponds to growth (or contraction) in interest-bearing debt in the country.[3][30][41] The concepts involved in monetary policy may be widely misunderstood in the general public, as evidenced by the volume of literature on topics such as “Federal Reserve conspiracy” and “Federal Reserve fraud.”[51]

Uncertainties

A few of the uncertainties involved in monetary policy decision making are described by the federal reserve:[52]

  • While these policy choices seem reasonably straightforward, monetary policy makers routinely face certain notable uncertainties. First, the actual position of the economy and growth in aggregate demand at any time are only partially known, as key information on spending, production, and prices becomes available only with a lag. Therefore, policy makers must rely on estimates of these economic variables when assessing the appropriate course of policy, aware that they could act on the basis of misleading information. Second, exactly how a given adjustment in the federal funds rate will affect growth in aggregate demand—in terms of both the overall magnitude and the timing of its impact—is never certain. Economic models can provide rules of thumb for how the economy will respond, but these rules of thumb are subject to statistical error. Third, the growth in aggregate supply, often called the growth in potential output, cannot be measured with certainty.
  • In practice, as previously noted, monetary policy makers do not have up-to-the-minute information on the state of the economy and prices. Useful information is limited not only by lags in the collection and availability of key data but also by later revisions, which can alter the picture considerably. Therefore, although monetary policy makers will eventually be able to offset the effects that adverse demand shocks have on the economy, it will be some time before the shock is fully recognized and—given the lag between a policy action and the effect of the action on aggregate demand—an even longer time before it is countered. Add to this the uncertainty about how the economy will respond to an easing or tightening of policy of a given magnitude, and it is not hard to see how the economy and prices can depart from a desired path for a period of time.
  • The statutory goals of maximum employment and stable prices are easier to achieve if the public understands those goals and believes that the Federal Reserve will take effective measures to achieve them.
  • Although the goals of monetary policy are clearly spelled out in law, the means to achieve those goals are not. Changes in the FOMC’s target federal funds rate take some time to affect the economy and prices, and it is often far from obvious whether a selected level of the federal funds rate will achieve those goals.

Opinions of the Federal Reserve

The Federal Reserve is lauded by some economists, while being the target of scathing criticism by other economists, legislators, and sometimes members of the general public. The former Chairman of the Federal Reserve Board, Ben Bernanke, is one of the leading academic critics of the Federal Reserve’s policies during the Great Depression.[53]

Achievements

One of the functions of a central bank is to facilitate the transfer of funds through the economy, and the Federal Reserve System is largely responsible for the efficiency in the banking sector. There have also been specific instances which put the Federal Reserve in the spotlight of public attention. For instance, after the stock market crash in 1987, the actions of the Fed are generally believed to have aided in recovery. Also, the Federal Reserve is credited for easing tensions in the business sector with the reassurances given following the 9/11 terrorist attacks on the United States.[54]

Criticisms

The Federal Reserve has been the target of various criticisms, involving: accountability, effectiveness, opacity, inadequate banking regulation, and potential market distortion. Federal Reserve policy has also been criticized for directly and indirectly benefiting large banks instead of consumers. For example, regarding the Federal Reserve’s response to the 2007–2010 financial crisis, Nobel laureate Joseph Stiglitz explained how the U.S. Federal Reserve was implementing another monetary policy —creating currency— as a method to combat the liquidity trap.[55]

By creating $600 billion and inserting this directly into banks the Federal Reserve intended to spur banks to finance more domestic loans and refinance mortgages. However, banks instead were spending the money in more profitable areas by investing internationally in emerging markets. Banks were also investing in foreign currencies which Stiglitz and others point out may lead to currency wars while China redirects its currency holdings away from the United States.[56]

Auditing

The Federal Reserve is subject to different requirements for transparency and audits than other government agencies, which its supporters claim is another element of the Fed’s independence. Although the Federal Reserve has been required by law to publish independently audited financial statements since 1999, the Federal Reserve is not audited in the same way as other government agencies. Some confusion can arise because there are many types of audits, including: investigative or fraud audits; and financial audits, which are audits of accounting statements; there are also compliance, operational, and information system audits.

The Federal Reserve’s annual financial statements are audited by an outside auditor. Similar to other government agencies, the Federal Reserve maintains an Office of the Inspector General, whose mandate includes conducting and supervising “independent and objective audits, investigations, inspections, evaluations, and other reviews of Board programs and operations.”[57] The Inspector General’s audits and reviews are available on the Federal Reserve’s website.[58][59]

The Government Accountability Office (GAO) has the power to conduct audits, subject to certain areas of operations that are excluded from GAO audits; other areas may be audited at specific Congressional request, and have included bank supervision, government securities activities, and payment system activities.[60][61] The GAO is specifically restricted any authority over monetary policy transactions;[60] the New York Times reported in 1989 that “such transactions are now shielded from outside audit, although the Fed influences interest rates through the purchase of hundreds of billions of dollars in Treasury securities.”[62] As mentioned above, it was in 1999 that the law governing the Federal Reserve was amended to formalize the already-existing annual practice of ordering independent audits of financial statements for the Federal Reserve Banks and the Board;[63] the GAO’s restrictions on auditing monetary policy continued, however.[61]

Congressional oversight on monetary policy operations, foreign transactions, and the FOMC operations is exercised through the requirement for reports and through semi-annual monetary policy hearings.[61] Scholars have conceded that the hearings did not prove an effective means of increasing oversight of the Federal Reserve, perhaps because “Congresspersons prefer to bash an autonomous and secretive Fed for economic misfortune rather than to share the responsibility for that misfortune with a fully accountable Central Bank,” although the Federal Reserve has also consistently lobbied to maintain its independence and freedom of operation.[64]

Fulfillment of wider economic goals

By law, the goals of the Fed’s monetary policy are: high employment, sustainable growth, and stable prices.[65]

Critics say that monetary policy in the United States has not achieved consistent success in meeting the goals that have been delegated to the Federal Reserve System by Congress. Congress began to review more options with regard to macroeconomic influence beginning in 1946 (after World War II), with the Federal Reserve receiving specific mandates in 1977 (after the country suffered a period of stagflation).

Throughout the period of the Federal Reserve following the mandates, the relative weight given to each of these goals has changed, depending on political developments.[citation needed] In particular, the theories of Keynesianism and monetarism have had great influence on both the theory and implementation of monetary policy, and the “prevailing wisdom” or consensus view of the economic and financial communities has changed over the years.[66]

  • Elastic currency (magnitude of the money multiplier): the success of monetary policy is dependent on the ability to strongly influence the supply of money available to the citizens. If a currency is highly “elastic” (that is, has a higher money multiplier, corresponding to a tendency of the financial system to create more broad money for a given quantity of base money), plans to expand the money supply and accommodate growth are easier to implement. Low elasticity was one of many factors that contributed to the depth of the Great Depression: as banks cut lending, the money multiplier fell, and at the same time the Federal Reserve constricted the monetary base. The depression of the late 1920s is generally regarded as being the worst in the country’s history, and the Federal Reserve has been criticized for monetary policy which worsened the depression.[67] Partly to alleviate problems related to the depression, the United States transitioned from a gold standard and now uses a fiat currency; elasticity is believed to have been increased greatly.[68]

The value of $1 over time, in 1776 dollars.[70]

  • Stable prices – While some economists would regard any consistent inflation as a sign of unstable prices,[71] policymakers could be satisfied with 1 or 2%;[72] the consensus of “price stability” constituting long-run inflation of 1-2% is, however, a relatively recent development, and a change that has occurred at other central banks throughout the world. Inflation has averaged a 4.22% increase annually following the mandates applied in 1977; historic inflation since the establishment of the Federal Reserve in 1913 has averaged 3.4%.[73] In contrast, some research indicates that average inflation for the 250 years before the system was near zero percent, though there were likely sharper upward and downward spikes in that timeframe as compared with more recent times.[74] Central banks in some other countries, notably the German Bundesbank, had considerably better records of achieving price stability drawing on experience from the two episodes of hyperinflation and economic collapse under the country’s previous central bank.

Inflation worldwide has fallen significantly since former Federal Reserve Chairman Paul Volcker began his tenure in 1979, a period which has been called the Great Moderation; some commentators attribute this to improved monetary policy worldwide, particularly in the Organisation for Economic Co-operation and Development.[75][76]BusinessWeek notes that inflation has been relatively low since mid-1980s[77] and it was during this time that Volcker wrote (in 1995), “It is a sobering fact that the prominence of central banks [such as the Federal Reserve] in this century has coincided with a general tendency towards more inflation, not less. By and large, if the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with ‘free banking.'”.

  • Sustainable growth – The growth of the economy may not be sustainable as the ability for households to save money has been on an overall decline[78] and household debt is consistently rising.[79]

Cause of The Great Depression

Money supply decreased significantly between Black Tuesday and the Bank Holiday in March 1933 when there were massive bank runs

Monetarists who believe that the Great Depression started as an ordinary recession but significant policy mistakes by monetary authorities (especially the Federal Reserve) caused a shrinking of the money supply which greatly exacerbated the economic situation, causing a recession to descend into the Great Depression.

Public confusion

The Federal Reserve has established a library of information on their websites, however, many experts have spoken about the general level of public confusion that still exists on the subject of the economy; this lack of understanding of macroeconomic questions and monetary policy, however, exists in other countries as well. Critics of the Fed widely regard the system as being “opaque“, and one of the Fed’s most vehement opponents of his time, Congressman Louis T. McFadden, even went so far as to say that “Every effort has been made by the Federal Reserve Board to conceal its powers….”[80]

There are, on the other hand, many economists who support the need for an independent central banking authority, and some have established websites that aim to clear up confusion about the economy and the Federal Reserve’s operations. The Federal Reserve website itself publishes various information and instructional materials for a variety of audiences.

Criticism of government interference

Some economists, especially those belonging to the heterodox Austrian School, criticize the idea of even establishing monetary policy, believing that it distorts investment. Friedrich Hayek won the Nobel Prize for his elaboration of the Austrian business cycle theory.

Briefly, the theory holds that an artificial injection of credit, from a source such as a central bank like the Federal Reserve, sends false signals to entrepreneurs to engage in long-term investments due to a favorably low interest rate. However, the surge of investments undertaken represents an artificial boom, or bubble, because the low interest rate was achieved by an artificial expansion of the money supply and not by savings. Hence, the pool of real savings and resources have not increased and do not justify the investments undertaken.

These investments, which are more appropriately called “malinvestments”, are realized to be unsustainable when the artificial credit spigot is shut off and interest rates rise. The malinvestments and unsustainable projects are liquidated, which is the recession. The theory demonstrates that the problem is the artificial boom which causes the malinvestments in the first place, made possible by an artificial injection of credit not from savings.

According to Austrian economics, without government intervention, interest rates will always be an equilibrium between the time-preferences of borrowers and savers, and this equilibrium is simply distorted by government intervention. This distortion, in their view, is the cause of the business cycle. Some Austrian economists—but by no means all—also support full reserve banking, a hypothetical financial/banking system where banks may not lend deposits. Others may advocate free banking, whereby the government abstains from any interference in what individuals may choose to use as money or the extent to which banks create money through the deposit and lending cycle.

Reserve requirement

The Federal Reserve regulates banking, and one regulation under its direct control is the reserve requirement which dictates how much money banks must keep in reserves, as compared to its demand deposits. Banks use their observation that the majority of deposits are not requested by the account holders at the same time.

Currently, the Federal Reserve requires that banks keep 10% of their deposits on hand.[81] Some countries have no nationally mandated reserve requirements—banks use their own resources to determine what to hold in reserve, however their lending is typically constrained by other regulations.[82] Other factors being equal, lower reserve percentages increases the possibility of Bank runs, such as the widespread runs of 1931. Low reserve requirements also allow for larger expansions of the money supply by actions of commercial banks—currently the private banking system has created much of the broad money supply of US dollars through lending activity. Monetary policy reform calling for 100% reserves has been advocated by economists such as: Irving Fisher,[83] Frank Knight,[84] many ecological economists along with economists of the Chicago School and Austrian School. Despite calls for reform, the nearly universal practice of fractional-reserve banking has remained in the United States.

Criticism of private sector involvement

Historically and to the present day, various social and political movements (such as social credit) have criticized the involvement of the private sector in “creating money”, claiming that only the government should have the power to “make money”. Some proponents also support full reserve banking or other non-orthodox approaches to monetary policy. Various terminology may be used, including “debt money”, which may have emotive or political connotations. These are generally considered to be akin to conspiracy theories by mainstream economists and ignored in academic literature on monetary policy.

See also

https://en.wikipedia.org/wiki/Monetary_policy_of_the_United_States

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Non-accelarating Inflation Rate of Unemployment (NAIRU) — Phillips Curve — Money and Inflation — No Real Tradeoff Between Price Increases and Unemployment Rate In The Long Run — States and Nations Cutting Taxes Resulted In Higher Growth and Lower Unemployment — Videos

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NAIRU

From Wikipedia, the free encyclopedia

NAIRU is an acronym for non-accelerating inflation rate of unemployment,[1] and refers to a level of unemployment below which inflation rises. It was first introduced as NIRU (non-inflationary rate of unemployment) by Franco Modigliani and Lucas Papademos in 1975, as an improvement over the “natural rate of unemployment” concept,[2][3][4] which was proposed earlier by Milton Friedman.[5]

Monetary policy conducted under the assumption of a NAIRU involves allowing just enough unemployment in the economy to prevent inflation rising above a given target figure. Prices are allowed to increase gradually and some unemployment is tolerated.

Contents

 [show] 

Origins

An early form of NAIRU is found in the work of Abba P. Lerner (Lerner 1951, Chapter 14), who referred to it as “low full employment” attained via the expansion of aggregate demand, in contrast with the “high full employment” which adds incomes policies (wage and price controls) to demand stimulation.

The concept arose in the wake of the popularity of the Phillips curve which summarized the observed negative correlation between the rate of unemployment and the rate of inflation (measured as annual nominal wage growth of employees) for number of industrialised countries with more or less mixed economies. This correlation (previously seen for the U.S. by Irving Fisher) persuaded some analysts that it was impossible for governments simultaneously to target both arbitrarily low unemployment and price stability, and that, therefore, it was government’s role to seek a point on the trade-off between unemployment and inflation which matched a domestic social consensus.

During the 1970s in the United States and several other industrialized countries, Phillips curve analysis became less popular, because inflation rose at the same time that unemployment rose (see stagflation).

Worse, as far as many economists were concerned, was that the Phillips curve had little or no theoretical basis. Critics of this analysis (such as Milton Friedman and Edmund Phelps) argued that the Phillips curve could not be a fundamental characteristic of economic general equilibrium because it showed a correlation between a real economic variable (the unemployment rate) and a nominal economic variable (the inflation rate). Their counter-analysis was that government macroeconomic policy (primarily monetary policy) was being driven by a low unemployment target and that this caused expectations of inflation to change, so that steadily accelerating inflation rather than reduced unemployment was the result. The resulting prescription was that government economic policy (or at least monetary policy) should not be influenced by any level of unemployment below a critical level – the “natural rate” or NAIRU.[6]

The natural rate hypothesis

The idea behind the natural rate hypothesis put forward by Friedman was that any given labor market structure must involve a certain amount of unemployment, including frictional unemployment associated with individuals changing jobs and possibly classical unemployment arising from real wages being held above the market-clearing level by minimum wage laws, trade unions or other labour market institutions. Unexpected inflation might allow unemployment to fall below the natural rate by temporarily depressing real wages, but this effect would dissipate once expectations about inflation were corrected. Only with continuously accelerating inflation could rates of unemployment below the natural rate be maintained.

The analysis supporting the natural rate hypothesis was controversial, and empirical evidence suggested that the natural rate varied over time in ways that could not easily be explained by changes in labor market structures. As a result, the “natural rate” terminology was largely supplanted by that of the NAIRU, which referred to a rate of unemployment below which inflation would accelerate, but did not imply a commitment to any particular theoretical explanation, or a prediction that the rate would be stable over time.

Properties

If {\displaystyle U*}U* is the NAIRU and {\displaystyle U}U is the actual unemployment rate, the theory says that:

if {\displaystyle U<U*}U<U* for a few years, inflationary expectations rise, so that the inflation rate tends to increase;
if {\displaystyle U>U*}U>U* for a few years, inflationary expectations fall, so that the inflation rate tends to slow (there is disinflation); and
if {\displaystyle U=U*}U=U*, the inflation rate tends to stay the same, unless there is an exogenous shock.

Okun’s law can be stated as saying that for every one percentage point by which the actual unemployment rate exceeds the so-called “natural” rate of unemployment, real gross domestic product is reduced by 2% to 3%.

Criticism

The NAIRU analysis assumes that if inflation increases, workers and employers can create contracts that take into account expectations of higher inflation and agree on a level of wage inflation that matches the expected level of price inflation to maintain constant real wages. Therefore, the analysis requires inflation to accelerate to maintain low unemployment. However, this argument implicitly assumes that workers and employers cannot contract to incorporate accelerating inflation into wage expectations, but there is no clear justification for assuming that expectations or contract structures are limited in this way aside from the fact that such wage arrangements are not commonly observed.

The NAIRU analysis is especially problematic if the Phillips curve displays hysteresis, that is, if episodes of high unemployment raise the NAIRU.[7] This could happen, for example, if unemployed workers lose skills so that employers prefer to bid up of the wages of existing workers when demand increases, rather than hiring the unemployed.

Others, such as Abba Lerner (1951, 1967) and Hyman Minsky (1965) have argued that a similar effect can be achieved without the human costs of unemployment via a job guarantee, where rather than being unemployed, those who cannot find work in the private sector should be employed by the government. This theory, and the policy of the job guarantee replaces the NAIRU with the NAIBER (non-accelerating-inflation-buffer employment ratio).[8]

Relationship to other economic theories

Most economists do not see the NAIRU theory as explaining all inflation. Instead, it is possible to move along a short run Phillips Curve (even though the NAIRU theory says that this curve shifts in the longer run) so that unemployment can rise or fall due to changes in inflation. Exogenous supply-shock inflation is also possible, as with the “energy crises” of the 1970s or the credit crunch of the early 21st century.

The NAIRU theory was mainly intended as an argument against active Keynesian demand management and in favor of free markets (at least on the macroeconomic level). There is, for instance, no theoretical basis for predicting the NAIRU. Monetarists instead support the generalized assertion that the correct approach to unemployment is through microeconomic measures (to lower the NAIRU whatever its exact level), rather than macroeconomic activity based on an estimate of the NAIRU in relation to the actual level of unemployment. Monetary policy, they maintain, should aim instead at stabilizing the inflation rate.

Naming

The NAIRU, non-accelerating inflation rate of unemployment, is actually misnamed. It is the price level that is accelerating (or decelerating), not the inflation rate. The inflation rate is just changing, not accelerating.[9]

See also

References

  1. Jump up^ Coe, David T, Nominal Wages. The NAIRU and Wage Flexibility. (PDF), Organisation for Economic Co-operation and Development
  2. Jump up^ Modigliani, Franco; Papademos, Lucas (1975). “Targets for Monetary Policy in the Coming Year”. Brookings Papers on Economic Activity. The Brookings Institution. 1975 (1): 141–165. doi:10.2307/2534063. JSTOR 2534063.
  3. Jump up^ Robert M. Solow, Modigliani and Monetarism, p. 6.
  4. Jump up^ Snowdon, Brian; Vane, Howard R. (2005). Modern Macroeconomics: Its Origins, Development and Current State. Cheltenham: E. Elgar. p. 187. ISBN 1-84376-394-X.
  5. Jump up^ Friedman, Milton (1968). “The Role of Monetary Policy”. American Economic Review. 58 (1): 1–17. JSTOR 1831652.
  6. Jump up^ Hoover, Kevin D, “Phillips Curve”, The Concise Encyclopedia of Economics, The Library of Economics and Liberty, retrieved 16 July 2007
  7. Jump up^ Ball, Laurence (2009), Hysteresis in Unemployment: Old and New Evidence (PDF)
  8. Jump up^ William Mitchell, J. Muysken (2008), Full employment abandoned: shifting sands and policy failures, Edward Elgar Publishing, ISBN 1-85898-507-2
  9. Jump up^ Case, K.E. and Fair, R.C. and Oster, S.M. (2016). Principles of Macroeconomics. Pearson. ISBN 9780133023671.

Further reading

External links

https://en.wikipedia.org/wiki/NAIRU

Phillips curve

From Wikipedia, the free encyclopedia
For the Phillips curve in supernova astrophysics, see Phillips relationship.

The Phillips curve is a single-equation empirical model, named after A. W. Phillips, describing a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result within an economy. Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.

While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run.[1] In 1968, Milton Friedman asserted that the Phillips curve was only applicable in the short-run and that in the long-run, inflationary policies will not decrease unemployment.[2][3] Friedman then correctly predicted that, in the 1973–75 recession, both inflation and unemployment would increase.[3] The long-run Phillips curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment.[4] Accordingly, the Phillips curve is now seen as too simplistic, with the unemployment rate supplanted by more accurate predictors of inflation based on velocity of moneysupply measures such as the MZM (“money zero maturity”) velocity,[5] which is affected by unemployment in the short but not the long term.[6]

Contents

 [show] 

History

Rate of Change of Wages against Unemployment, United Kingdom 1913–1948 from Phillips (1958)

William Phillips, a New Zealand born economist, wrote a paper in 1958 titled The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957, which was published in the quarterly journal Economica.[7] In the paper Phillips describes how he observed an inverse relationship between money wage changes and unemployment in the British economy over the period examined. Similar patterns were found in other countries and in 1960 Paul Samuelson and Robert Solow took Phillips’ work and made explicit the link between inflation and unemployment: when inflation was high, unemployment was low, and vice versa.[8]

In the 1920s, an American economist Irving Fisher noted this kind of Phillips curve relationship. However, Phillips’ original curve described the behavior of money wages.[9]

In the years following Phillips’ 1958 paper, many economists in the advanced industrial countries believed that his results showed that there was a permanently stable relationship between inflation and unemployment.[citation needed] One implication of this for government policy was that governments could control unemployment and inflation with a Keynesian policy. They could tolerate a reasonably high rate of inflation as this would lead to lower unemployment – there would be a trade-off between inflation and unemployment. For example, monetary policy and/or fiscal policy could be used to stimulate the economy, raising gross domestic product and lowering the unemployment rate. Moving along the Phillips curve, this would lead to a higher inflation rate, the cost of enjoying lower unemployment rates.[citation needed] Economist James Forder argues that this view is historically false and that neither economists nor governments took that view and that the ‘Phillips curve myth’ was an invention of the 1970s.[10]

Since 1974, seven Nobel Prizes have been given to economists for, among other things, work critical of some variations of the Phillips curve. Some of this criticism is based on the United States’ experience during the 1970s, which had periods of high unemployment and high inflation at the same time. The authors receiving those prizes include Thomas Sargent, Christopher Sims, Edmund Phelps, Edward Prescott, Robert A. Mundell, Robert E. Lucas, Milton Friedman, and F.A. Hayek.[11]

Stagflation

In the 1970s, many countries experienced high levels of both inflation and unemployment also known as stagflation. Theories based on the Phillips curve suggested that this could not happen, and the curve came under a concerted attack from a group of economists headed by Milton Friedman.[citation needed] Friedman argued that the Phillips curve relationship was only a short-run phenomenon. In this he followed eight years after Samuelson and Solow [1960] who wrote ” All of our discussion has been phrased in short-run terms, dealing with what might happen in the next few years. It would be wrong, though, to think that our Figure 2 menu that related obtainable price and unemployment behavior will maintain its same shape in the longer run. What we do in a policy way during the next few years might cause it to shift in a definite way.”[8] As Samuelson and Solow had argued 8 years earlier, he argued that in the long run, workers and employers will take inflation into account, resulting in employment contracts that increase pay at rates near anticipated inflation. Unemployment would then begin to rise back to its previous level, but now with higher inflation rates. This result implies that over the longer-run there is no trade-off between inflation and unemployment. This implication is significant for practical reasons because it implies that central banks should not set employment targets above the natural rate.[1]

More recent research has shown that there is a moderate trade-off between low-levels of inflation and unemployment. Work by George Akerlof, William Dickens, and George Perry,[12]implies that if inflation is reduced from two to zero percent, unemployment will be permanently increased by 1.5 percent. This is because workers generally have a higher tolerance for real wage cuts than nominal ones. For example, a worker will more likely accept a wage increase of two percent when inflation is three percent, than a wage cut of one percent when the inflation rate is zero.

Today

U.S. Inflation and Unemployment 1/2000 to 4/2013

Most economists no longer use the Phillips curve in its original form because it was shown to be too simplistic.[6] This can be seen in a cursory analysis of US inflation and unemployment data from 1953–92. There is no single curve that will fit the data, but there are three rough aggregations—1955–71, 1974–84, and 1985–92—each of which shows a general, downwards slope, but at three very different levels with the shifts occurring abruptly. The data for 1953–54 and 1972–73 do not group easily, and a more formal analysis posits up to five groups/curves over the period.[1]

But still today, modified forms of the Phillips Curve that take inflationary expectations into account remain influential. The theory goes under several names, with some variation in its details, but all modern versions distinguish between short-run and long-run effects on unemployment. Modern Phillips curve models include both a short-run Phillips Curve and a long-run Phillips Curve. This is because in the short run, there is generally an inverse relationship between inflation and the unemployment rate; as illustrated in the downward sloping short-run Phillips curve. In the long run, that relationship breaks down and the economy eventually returns to the natural rate of unemployment regardless of the inflation rate.[13]

The “short-run Phillips curve” is also called the “expectations-augmented Phillips curve”, since it shifts up when inflationary expectations rise, Edmund Phelps and Milton Friedman argued. In the long run, this implies that monetary policy cannot affect unemployment, which adjusts back to its “natural rate“, also called the “NAIRU” or “long-run Phillips curve”. However, this long-run “neutrality” of monetary policy does allow for short run fluctuations and the ability of the monetary authority to temporarily decrease unemployment by increasing permanent inflation, and vice versa. The popular textbook of Blanchard gives a textbook presentation of the expectations-augmented Phillips curve.[14]

An equation like the expectations-augmented Phillips curve also appears in many recent New Keynesiandynamic stochastic general equilibrium models. In these macroeconomic models with sticky prices, there is a positive relation between the rate of inflation and the level of demand, and therefore a negative relation between the rate of inflation and the rate of unemployment. This relationship is often called the “New Keynesian Phillips curve.” Like the expectations-augmented Phillips curve, the New Keynesian Phillips curve implies that increased inflation can lower unemployment temporarily, but cannot lower it permanently. Two influential papers that incorporate a New Keynesian Phillips curve are Clarida, Galí, and Gertler (1999),[15] and Blanchard and Galí (2007).[16]

Mathematics

There are at least two different mathematical derivations of the Phillips curve. First, there is the traditional or Keynesian version. Then, there is the new Classical version associated with Robert E. Lucas, Jr.

The traditional Phillips curve

The original Phillips curve literature was not based on the unaided application of economic theory. Instead, it was based on empirical generalizations. After that, economists tried to develop theories that fit the data.

Money wage determination

The traditional Phillips curve story starts with a wage Phillips Curve, of the sort described by A.W. Phillips himself. This describes the rate of growth of money wages (gW). Here and below, the operator g is the equivalent of “the percentage rate of growth of” the variable that follows.

{\displaystyle gW=gW^{T}-f(U)}gW=gW^{{T}}-f(U)

The “money wage rate” (W) is shorthand for total money wage costs per production employee, including benefits and payroll taxes. The focus is on only production workers’ money wages, because (as discussed below) these costs are crucial to pricing decisions by the firms.

This equation tells us that the growth of money wages rises with the trend rate of growth of money wages (indicated by the superscript “T”) and falls with the unemployment rate (U). The function f() is assumed to be monotonically increasing with U so that the dampening of money-wage increases by unemployment is shown by the negative sign in the equation above.

There are several possible stories behind this equation. A major one is that money wages are set by bilateral negotiations under partial bilateral monopoly: as the unemployment rate rises, all else constant worker bargaining power falls, so that workers are less able to increase their wages in the face of employer resistance.

During the 1970s, this story had to be modified, because (as the late Abba Lerner had suggested in the 1940s) workers try to keep up with inflation. Since the 1970s, the equation has been changed to introduce the role of inflationary expectations (or the expected inflation rate, gPex). This produces the expectations-augmented wage Phillips curve:

{\displaystyle gW=gW^{T}-f(U)+\lambda .gP^{ex}.}gW=gW^{{T}}-f(U)+\lambda .gP^{{ex}}.

The introduction of inflationary expectations into the equation implies that actual inflation can feed back into inflationary expectations and thus cause further inflation. The late economist James Tobin dubbed the last term “inflationary inertia,” because in the current period, inflation exists which represents an inflationary impulse left over from the past.

It also involved much more than expectations, including the price-wage spiral. In this spiral, employers try to protect profits by raising their prices and employees try to keep up with inflation to protect their real wages. This process can feed on itself, becoming a self-fulfilling prophecy.

The parameter λ (which is presumed constant during any time period) represents the degree to which employees can gain money wage increases to keep up with expected inflation, preventing a fall in expected real wages. It is usually assumed that this parameter equals unity in the long run.

In addition, the function f() was modified to introduce the idea of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) or what’s sometimes called the “natural” rate of unemployment or the inflation-threshold unemployment rate:

[1] gW = gWTf(UU*) + λ·gPex.

Here, U* is the NAIRU. As discussed below, if U < U*, inflation tends to accelerate. Similarly, if U > U*, inflation tends to slow. It is assumed that f(0) = 0, so that when U = U*, the f term drops out of the equation.

In equation [1], the roles of gWT and gPex seem to be redundant, playing much the same role. However, assuming that λ is equal to unity, it can be seen that they are not. If the trend rate of growth of money wages equals zero, then the case where U equals U* implies that gW equals expected inflation. That is, expected real wages are constant.

In any reasonable economy, however, having constant expected real wages could only be consistent with actual real wages that are constant over the long haul. This does not fit with economic experience in the U.S. or any other major industrial country. Even though real wages have not risen much in recent years, there have been important increases over the decades.

An alternative is to assume that the trend rate of growth of money wages equals the trend rate of growth of average labor productivity (Z). That is:

[2] gWT = gZT.

Under assumption [2], when U equals U* and λ equals unity, expected real wages would increase with labor productivity. This would be consistent with an economy in which actual real wages increase with labor productivity. Deviations of real-wage trends from those of labor productivity might be explained by reference to other variables in the model.

Pricing decisions

Next, there is price behavior. The standard assumption is that markets are imperfectly competitive, where most businesses have some power to set prices. So the model assumes that the average business sets a unit price (P) as a mark-up (M) over the unit labor cost in production measured at a standard rate of capacity utilization (say, at 90 percent use of plant and equipment) and then adds in the unit materials cost.

The standardization involves later ignoring deviations from the trend in labor productivity. For example, assume that the growth of labor productivity is the same as that in the trend and that current productivity equals its trend value:

gZ = gZT and Z = ZT.

The markup reflects both the firm’s degree of market power and the extent to which overhead costs have to be paid. Put another way, all else equal, M rises with the firm’s power to set prices or with a rise of overhead costs relative to total costs.

So pricing follows this equation:

P = M × (unit labor cost) + (unit materials cost)
= M × (total production employment cost)/(quantity of output) + UMC.

UMC is unit raw materials cost (total raw materials costs divided by total output). So the equation can be restated as:

P = M × (production employment cost per worker)/(output per production employee) + UMC.

This equation can again be stated as:

P = M×(average money wage)/(production labor productivity) + UMC
= M×(W/Z) + UMC.

Now, assume that both the average price/cost mark-up (M) and UMC are constant. On the other hand, labor productivity grows, as before. Thus, an equation determining the price inflation rate (gP) is:

gP = gWgZT.

Price[edit]

Then, combined with the wage Phillips curve [equation 1] and the assumption made above about the trend behavior of money wages [equation 2], this price-inflation equation gives us a simple expectations-augmented price Phillips curve:

gP = −f(UU*) + λ·gPex.

Some assume that we can simply add in gUMC, the rate of growth of UMC, in order to represent the role of supply shocks (of the sort that plagued the U.S. during the 1970s). This produces a standard short-term Phillips curve:

gP = −f(UU*) + λ·gPex + gUMC.

Economist Robert J. Gordon has called this the “Triangle Model” because it explains short-run inflationary behavior by three factors: demand inflation (due to low unemployment), supply-shock inflation (gUMC), and inflationary expectations or inertial inflation.

In the long run, it is assumed, inflationary expectations catch up with and equal actual inflation so that gP = gPex. This represents the long-term equilibrium of expectations adjustment. Part of this adjustment may involve the adaptation of expectations to the experience with actual inflation. Another might involve guesses made by people in the economy based on other evidence. (The latter idea gave us the notion of so-called rational expectations.)

Expectational equilibrium gives us the long-term Phillips curve. First, with λ less than unity:

gP = [1/(1 − λ)]·(−f(UU*) + gUMC).

This is nothing but a steeper version of the short-run Phillips curve above. Inflation rises as unemployment falls, while this connection is stronger. That is, a low unemployment rate (less than U*) will be associated with a higher inflation rate in the long run than in the short run. This occurs because the actual higher-inflation situation seen in the short run feeds back to raise inflationary expectations, which in turn raises the inflation rate further. Similarly, at high unemployment rates (greater than U*) lead to low inflation rates. These in turn encourage lower inflationary expectations, so that inflation itself drops again.

This logic goes further if λ is equal to unity, i.e., if workers are able to protect their wages completely from expected inflation, even in the short run. Now, the Triangle Model equation becomes:

f(UU*) = gUMC.

If we further assume (as seems reasonable) that there are no long-term supply shocks, this can be simplified to become:

f(UU*) = 0 which implies that U = U*.

All of the assumptions imply that in the long run, there is only one possible unemployment rate, U* at any one time. This uniqueness explains why some call this unemployment rate “natural.”

To truly understand and criticize the uniqueness of U*, a more sophisticated and realistic model is needed. For example, we might introduce the idea that workers in different sectors push for money wage increases that are similar to those in other sectors. Or we might make the model even more realistic. One important place to look is at the determination of the mark-up, M.

New classical version

The Phillips curve equation can be derived from the (short-run) Lucas aggregate supply function. The Lucas approach is very different from that the traditional view. Instead of starting with empirical data, he started with a classical economic model following very simple economic principles.

Start with the aggregate supply function:

{\displaystyle Y=Y_{n}+a(P-P_{e})\,}Y=Y_{n}+a(P-P_{e})\,

where Y is log value of the actual output, Yn is log value of the “natural” level of output, a is a positive constant, P is log value of the actual price level, and Pe is log value of the expected price level. Lucas assumes that Yn has a unique value.

Note that this equation indicates that when expectations of future inflation (or, more correctly, the future price level) are totally accurate, the last term drops out, so that actual output equals the so-called “natural” level of real GDP. This means that in the Lucas aggregate supply curve, the only reason why actual real GDP should deviate from potential—and the actual unemployment rate should deviate from the “natural” rate—is because of incorrect expectations of what is going to happen with prices in the future. (The idea has been expressed first by Keynes, General Theory, Chapter 20 section III paragraph 4).

This differs from other views of the Phillips curve, in which the failure to attain the “natural” level of output can be due to the imperfection or incompleteness of markets, the stickiness of prices, and the like. In the non-Lucas view, incorrect expectations can contribute to aggregate demand failure, but they are not the only cause. To the “new Classical” followers of Lucas, markets are presumed to be perfect and always attain equilibrium (given inflationary expectations).

We re-arrange the equation into:

{\displaystyle P=P_{e}+{\frac {Y-Y_{n}}{a}}}P=P_{e}+{\frac {Y-Y_{n}}{a}}

Next we add unexpected exogenous shocks to the world supply v:

{\displaystyle P=P_{e}+{\frac {Y-Y_{n}}{a}}+v}P=P_{e}+{\frac {Y-Y_{n}}{a}}+v

Subtracting last year’s price levels P−1 will give us inflation rates, because

{\displaystyle P-P_{-1}\ \approx \pi }P-P_{{-1}}\ \approx \pi

and

{\displaystyle P_{e}-P_{-1}\ \approx \pi _{e}}P_{e}-P_{{-1}}\ \approx \pi _{e}

where π and πe are the inflation and expected inflation respectively.

There is also a negative relationship between output and unemployment (as expressed by Okun’s law). Therefore, using

{\displaystyle {\frac {Y-Y_{n}}{a}}=-b(U-U_{n})}{\frac {Y-Y_{n}}{a}}=-b(U-U_{n})

where b is a positive constant, U is unemployment, and Un is the natural rate of unemployment or NAIRU, we arrive at the final form of the short-run Phillips curve:

{\displaystyle \pi =\pi _{e}-b(U-U_{n})+v\,}\pi =\pi _{e}-b(U-U_{n})+v\,

This equation, plotting inflation rate π against unemployment U gives the downward-sloping curve in the diagram that characterises the Phillips curve.

New Keynesian version

The New Keynesian Phillips curve was originally derived by Roberts in 1995,[17] and since been used in most state-of-the-art New Keynesian DSGE models like the one of Clarida, Galí, and Gertler (2000).[18][19]

{\displaystyle \pi _{t}=\beta E_{t}[\pi _{t+1}]+\kappa y_{t}}\pi _{{t}}=\beta E_{{t}}[\pi _{{t+1}}]+\kappa y_{{t}}

where {\displaystyle \kappa ={\frac {\alpha [1-(1-\alpha )\beta ]\phi }{1-\alpha }}}\kappa ={\frac {\alpha [1-(1-\alpha )\beta ]\phi }{1-\alpha }}. The current expectations of next period’s inflation are incorporated as {\displaystyle \beta E_{t}[\pi _{t+1}]}\beta E_{{t}}[\pi _{{t+1}}]

NAIRU and rational expectations

Short-Run Phillips Curve before and after Expansionary Policy, with Long-Run Phillips Curve (NAIRU)

In the 1970s, new theories, such as rational expectations and the NAIRU (non-accelerating inflation rate of unemployment) arose to explain how stagflation could occur. The latter theory, also known as the “natural rate of unemployment“, distinguished between the “short-term” Phillips curve and the “long-term” one. The short-term Phillips Curve looked like a normal Phillips Curve, but shifted in the long run as expectations changed. In the long run, only a single rate of unemployment (the NAIRU or “natural” rate) was consistent with a stable inflation rate. The long-run Phillips Curve was thus vertical, so there was no trade-off between inflation and unemployment. Edmund Phelps won the Nobel Prize in Economics in 2006 in part for this. However, the expectations argument was in fact very widely understood before his work on it.[20]

In the diagram, the long-run Phillips curve is the vertical red line. The NAIRU theory says that when unemployment is at the rate defined by this line, inflation will be stable. However, in the short-run policymakers will face an inflation-unemployment rate tradeoff marked by the “Initial Short-Run Phillips Curve” in the graph. Policymakers can therefore reduce the unemployment rate temporarily, moving from point A to point B through expansionary policy. However, according to the NAIRU, exploiting this short-run tradeoff will raise inflation expectations, shifting the short-run curve rightward to the “New Short-Run Phillips Curve” and moving the point of equilibrium from B to C. Thus the reduction in unemployment below the “Natural Rate” will be temporary, and lead only to higher inflation in the long run.

Since the short-run curve shifts outward due to the attempt to reduce unemployment, the expansionary policy ultimately worsens the exploitable tradeoff between unemployment and inflation. That is, it results in more inflation at each short-run unemployment rate. The name “NAIRU” arises because with actual unemployment below it, inflation accelerates, while with unemployment above it, inflation decelerates. With the actual rate equal to it, inflation is stable, neither accelerating nor decelerating. One practical use of this model was to provide an explanation for stagflation, which confounded the traditional Phillips curve.

The rational expectations theory said that expectations of inflation were equal to what actually happened, with some minor and temporary errors. This in turn suggested that the short-run period was so short that it was non-existent: any effort to reduce unemployment below the NAIRU, for example, would immediately cause inflationary expectations to rise and thus imply that the policy would fail. Unemployment would never deviate from the NAIRU except due to random and transitory mistakes in developing expectations about future inflation rates. In this perspective, any deviation of the actual unemployment rate from the NAIRU was an illusion.

However, in the 1990s in the U.S., it became increasingly clear that the NAIRU did not have a unique equilibrium and could change in unpredictable ways. In the late 1990s, the actual unemployment rate fell below 4% of the labor force, much lower than almost all estimates of the NAIRU. But inflation stayed very moderate rather than accelerating. So, just as the Phillips curve had become a subject of debate, so did the NAIRU.

Furthermore, the concept of rational expectations had become subject to much doubt when it became clear that the main assumption of models based on it was that there exists a single (unique) equilibrium in the economy that is set ahead of time, determined independently of demand conditions. The experience of the 1990s suggests that this assumption cannot be sustained.

Theoretical questions

The Phillips curve started as an empirical observation in search of a theoretical explanation.[citation needed] Specifically, the Phillips curve tried to determine whether the inflation-unemployment link was causal or simply correlational. There are several major explanations of the short-term Phillips curve regularity.

To Milton Friedman there is a short-term correlation between inflation shocks and employment. When an inflationary surprise occurs, workers are fooled into accepting lower pay because they do not see the fall in real wages right away. Firms hire them because they see the inflation as allowing higher profits for given nominal wages. This is a movement along the Phillips curve as with change A. Eventually, workers discover that real wages have fallen, so they push for higher money wages. This causes the Phillips curve to shift upward and to the right, as with B. Some research underlines that some implicit and serious assumptions are actually in the background of the Friedmanian Phillips curve. This information asymmetry and a special pattern of flexibility of prices and wages are both necessary if one wants to maintain the mechanism told by Friedman. However, as it is argued, these presumptions remain completely unrevealed and theoretically ungrounded by Friedman.[21]

Economists such as Milton Friedman and Edmund Phelps reject this theory because it implies that workers suffer from money illusion. According to them, rational workers would only react to real wages, that is, inflation adjusted wages. However, one of the characteristics of a modern industrial economy is that workers do not encounter their employers in an atomized and perfect market. They operate in a complex combination of imperfect markets, monopolies, monopsonies, labor unions, and other institutions. In many cases, they may lack the bargaining power to act on their expectations, no matter how rational they are, or their perceptions, no matter how free of money illusion they are. It is not that high inflation causes low unemployment (as in Milton Friedman’s theory) as much as vice versa: Low unemployment raises worker bargaining power, allowing them to successfully push for higher nominal wages. To protect profits, employers raise prices.

Similarly, built-in inflation is not simply a matter of subjective “inflationary expectations” but also reflects the fact that high inflation can gather momentum and continue beyond the time when it was started, due to the objective price/wage spiral.

However, other economists, like Jeffrey Herbener, argue that price is market-determined and competitive firms cannot simply raise prices.[citation needed] They reject the Phillips curve entirely, concluding that unemployment’s influence is only a small portion of a much larger inflation picture that includes prices of raw materials, intermediate goods, cost of raising capital, worker productivity, land, and other factors.

Gordon’s triangle model

Robert J. Gordon of Northwestern University has analyzed the Phillips curve to produce what he calls the triangle model, in which the actual inflation rate is determined by the sum of

  1. demand pull or short-term Phillips curve inflation,
  2. cost push or supply shocks, and
  3. built-in inflation.

The last reflects inflationary expectations and the price/wage spiral. Supply shocks and changes in built-in inflation are the main factors shifting the short-run Phillips Curve and changing the trade-off. In this theory, it is not only inflationary expectations that can cause stagflation. For example, the steep climb of oil prices during the 1970s could have this result.

Changes in built-in inflation follow the partial-adjustment logic behind most theories of the NAIRU:

  1. Low unemployment encourages high inflation, as with the simple Phillips curve. But if unemployment stays low and inflation stays high for a long time, as in the late 1960s in the U.S., both inflationary expectations and the price/wage spiral accelerate. This shifts the short-run Phillips curve upward and rightward, so that more inflation is seen at any given unemployment rate. (This is with shift B in the diagram.)
  2. High unemployment encourages low inflation, again as with a simple Phillips curve. But if unemployment stays high and inflation stays low for a long time, as in the early 1980s in the U.S., both inflationary expectations and the price/wage spiral slow. This shifts the short-run Phillips curve downward and leftward, so that less inflation is seen at each unemployment rate.

In between these two lies the NAIRU, where the Phillips curve does not have any inherent tendency to shift, so that the inflation rate is stable. However, there seems to be a range in the middle between “high” and “low” where built-in inflation stays stable. The ends of this “non-accelerating inflation range of unemployment rates” change over time.

Joke article

In 2008, Gregor Smith published a joke article in the prestigious Journal of Money, Credit and Banking titled “Japan’s Phillips Curve Looks Like Japan”. This article points out the uncanny resemblance between Japan’s Phillips curve and the country’s geographic shape.[22]

See also

References

  1. ^ Jump up to:a b c Chang, R. (1997) “Is Low Unemployment Inflationary?” Federal Reserve Bank of Atlanta Economic Review 1Q97:4-13
  2. Jump up^ Friedman, Milton (1968). “The role of monetary policy”. American Economic Review. 68 (1): 1–17. JSTOR 1831652.
  3. ^ Jump up to:a b Phelan, John (23 October 2012). “Milton Friedman and the rise and fall of the Phillips Curve”. thecommentator.com. Retrieved September 29, 2014.
  4. Jump up^ “Phillips Curve: The Concise Encyclopedia of Economics – Library of Economics and Liberty”.
  5. Jump up^ “Velocity of MZM Money Stock”. 22 December 2016.
  6. ^ Jump up to:a b Oliver Hossfeld (2010) “US Money Demand, Monetary Overhang, and Inflation Prediction” International Network for Economic Research working paper no. 2010.4
  7. Jump up^ Phillips, A. W. (1958). “The Relationship between Unemployment and the Rate of Change of Money Wages in the United Kingdom 1861-1957”. Economica. 25 (100): 283–299. doi:10.1111/j.1468-0335.1958.tb00003.x.
  8. ^ Jump up to:a b Samuelson, Paul A.; Solow, Robert M. (1960). “Analytical Aspects of Anti-Inflation Policy”. American Economic Review. 50 (2): 177–194. JSTOR 1815021.
  9. Jump up^ Fisher, Irving (1973). “I discovered the Phillips curve: ‘A statistical relation between unemployment and price changes'”. Journal of Political Economy. The University of Chicago Press. 81 (2): 496–502. doi:10.1086/260048. JSTOR 1830534. Reprinted from 1926 edition of International Labour Review.
  10. Jump up^ Forder, James (2014). Macroeconomics and the Phillips Curve Myth. Oxford University Press. ISBN 978-0-19-968365-9.
  11. Jump up^ Domitrovic, Brain (10 October 2011). “The Economics Nobel Goes to Sargent & Sims: Attackers of the Phillips Curve”. Forbes.com. Retrieved 12 October 2011.
  12. Jump up^ Akerlof, George A.; Dickens, William T.; Perry, George L. (2000). “Near-Rational Wage and Price Setting and the Long-Run Phillips Curve”. Brookings Papers on Economic Activity. 2000 (1): 1–60.
  13. Jump up^ Jacob, Reed (2016). “AP Macroeconomics Review: Phillips Curve”. APEconReview.com.
  14. Jump up^ Blanchard, Olivier (2000). Macroeconomics (Second ed.). Prentice Hall. pp. 149–55. ISBN 0-13-013306-X.
  15. Jump up^ Clarida, Richard; Galí, Jordi; Gertler, Mark (1999). “The science of monetary policy: a New-Keynesian perspective”. Journal of Economic Literature. American Economic Association. 37 (4): 1661–1707. doi:10.1257/jel.37.4.1661. JSTOR 2565488.
  16. Jump up^ Blanchard, Olivier; Galí, Jordi (2007). “Real Wage Rigidities and the New Keynesian Model”. Journal of Money, Credit, and Banking. 39 (s1): 35–65. doi:10.1111/j.1538-4616.2007.00015.x.
  17. Jump up^ Roberts, John M. (1995). “New Keynesian Economics and the Phillips Curve”. Journal of Money, Credit and Banking. 27 (4): 975–984. JSTOR 2077783.
  18. Jump up^ Clarida, Richard; Galí, Jordi; Gertler, Mark (2000). “Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory”. The Quarterly Journal of Economics. 115 (1): 147–180. doi:10.1162/003355300554692.
  19. Jump up^ Romer, David (2012). “Dynamic Stochastic General Equilibrium Models of Fluctuation”. Advanced Macroeconomics. New York: McGraw-Hill Irwin. pp. 312–364. ISBN 978-0-07-351137-5.
  20. Jump up^ Forder, James (2010). “The historical place of the ‘Friedman-Phelps’ expectations critique”. European Journal of the History of Economic Thought. 17 (3): 493–511. doi:10.1080/09672560903114875.
  21. Jump up^ Galbács, Peter (2015). The Theory of New Classical Macroeconomics. A Positive Critique. Heidelberg/New York/Dordrecht/London: Springer. doi:10.1007/978-3-319-17578-2. ISBN 978-3-319-17578-2.
  22. Jump up^ Smith, Gregor W. (1 September 2008). “Japan’s Phillips Curve Looks Like Japan”. 40 (6): 1325–1326. doi:10.1111/j.1538-4616.2008.00160.x – via Wiley Online Library.

Further reading

External links

https://en.wikipedia.org/wiki/Phillips_curve

Milton Friedman

From Wikipedia, the free encyclopedia
  (Redirected from Milton friedman)
Milton Friedman
Portrait of Milton Friedman.jpg

Friedman in 2004
Born July 31, 1912
Brooklyn, New York, U.S.
Died November 16, 2006 (aged 94)
San Francisco, California, U.S.
Nationality American
Spouse(s) Rose Friedman
Institution
School or
tradition
Chicago School
Alma mater
Doctoral
advisor
Simon Kuznets
Doctoral
students
Phillip Cagan
Harry Markowitz
Lester G. Telser[1]
David I. Meiselman
Neil Wallace
Miguel Sidrauski
Influences
Influenced
Contributions
Awards
Information at IDEAS / RePEc
Signature
Milton friedman signature.svg
Notes

Milton Friedman (July 31, 1912 – November 16, 2006) was an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy.[4] With George Stigler and others, Friedman was among the intellectual leaders of the second generation of Chicago price theory, a methodological movement at the University of Chicago’s Department of Economics, Law School, and Graduate School of Business from the 1940s onward. Several students and young professors that were recruited or mentored by Friedman at Chicago went on to become leading economists; they include Gary Becker, Robert Fogel, Thomas Sowell,[5] and Robert Lucas, Jr.[6]

Friedman’s challenges to what he later called “naive Keynesian” theory[7] began with his 1950s reinterpretation of the consumption function. In the 1960s, he became the main advocate opposing Keynesian government policies,[8] and described his approach (along with mainstream economics) as using “Keynesian language and apparatus” yet rejecting its “initial” conclusions.[9] He theorized that there existed a “natural” rate of unemployment, and argued that employment above this rate would cause inflation to accelerate.[10] He argued that the Phillips curve was, in the long run, vertical at the “natural rate” and predicted what would come to be known as stagflation.[11] Friedman promoted an alternative macroeconomic viewpoint known as “monetarism“, and argued that a steady, small expansion of the money supply was the preferred policy.[12] His ideas concerning monetary policy, taxation, privatization and deregulation influenced government policies, especially during the 1980s. His monetary theory influenced the Federal Reserve’s response to the global financial crisis of 2007–08.[13]

Friedman was an advisor to Republican U.S. President Ronald Reagan[14] and Conservative British Prime Minister Margaret Thatcher.[15] His political philosophy extolled the virtues of a free market economic system with minimal intervention. He once stated that his role in eliminating U.S. conscription was his proudest accomplishment. In his 1962 book Capitalism and Freedom, Friedman advocated policies such as a volunteer military, freely floating exchange rates, abolition of medical licenses, a negative income tax, and school vouchers.[16] His support for school choice led him to found the Friedman Foundation for Educational Choice, later renamed EdChoice.[17]

Milton Friedman’s works include many monographs, books, scholarly articles, papers, magazine columns, television programs, and lectures, and cover a broad range of economic topics and public policy issues. His books and essays have had an international influence, including in former communist states.[18][19][20][21] A survey of economists ranked Friedman as the second-most popular economist of the twentieth century after John Maynard Keynes,[22] and The Economist described him as “the most influential economist of the second half of the 20th century … possibly of all of it”.[23]

Contents

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Early life

Friedman was born in Brooklyn, New York on July 31, 1912. His parents, Sára Ethel (née Landau) and Jenő Saul Friedman,[24] were Jewish immigrants from Beregszász in Carpathian Ruthenia, Kingdom of Hungary (now Berehove in Ukraine). They both worked as dry goods merchants. Shortly after Milton’s birth, the family relocated to Rahway, New Jersey. In his early teens, Friedman was injured in a car accident, which scarred his upper lip.[25] A talented student, Friedman graduated from Rahway High School in 1928, just before his 16th birthday.[26][27]

In 1932, Friedman graduated from Rutgers University, where he specialized in mathematics and economics and initially intended to become an actuary. During his time at Rutgers, Friedman became influenced by two economics professors, Arthur F. Burns and Homer Jones, who convinced him that modern economics could help end the Great Depression.

After graduating from Rutgers, Friedman was offered two scholarships to do graduate work—one in mathematics at Brown University and the other in economics at the University of Chicago.[28] Friedman chose the latter, thus earning a Master of Arts degree in 1933. He was strongly influenced by Jacob Viner, Frank Knight, and Henry Simons. It was at Chicago that Friedman met his future wife, economist Rose Director. During the 1933–1934 academic year he had a fellowship at Columbia University, where he studied statistics with renowned statistician and economist Harold Hotelling. He was back in Chicago for the 1934–1935 academic year, working as a research assistant for Henry Schultz, who was then working on Theory and Measurement of Demand. That year, Friedman formed what would prove to be lifelong friendships with George Stigler and W. Allen Wallis.[29]

Public service

Friedman was initially unable to find academic employment, so in 1935 he followed his friend W. Allen Wallis to Washington, where Franklin D. Roosevelt‘s New Deal was “a lifesaver” for many young economists.[30] At this stage, Friedman said that he and his wife “regarded the job-creation programs such as the WPA, CCC, and PWA appropriate responses to the critical situation,” but not “the price- and wage-fixing measures of the National Recovery Administration and the Agricultural Adjustment Administration.”[31] Foreshadowing his later ideas, he believed price controls interfered with an essential signaling mechanism to help resources be used where they were most valued. Indeed, Friedman later concluded that all government intervention associated with the New Deal was “the wrong cure for the wrong disease,” arguing that the money supply should simply have been expanded, instead of contracted.[32] Later, Friedman and his colleague Anna Schwartz wrote A Monetary History of the United States, 1867–1960, which argued that the Great Depression was caused by a severe monetary contraction due to banking crises and poor policy on the part of the Federal Reserve.[33]

During 1935, he began work for the National Resources Committee, which was then working on a large consumer budget survey. Ideas from this project later became a part of his Theory of the Consumption Function. Friedman began employment with the National Bureau of Economic Research during autumn 1937 to assist Simon Kuznets in his work on professional income. This work resulted in their jointly authored publication Incomes from Independent Professional Practice, which introduced the concepts of permanent and transitory income, a major component of the Permanent Income Hypothesis that Friedman worked out in greater detail in the 1950s. The book hypothesizes that professional licensing artificially restricts the supply of services and raises prices.

During 1940, Friedman was appointed an assistant professor teaching Economics at the University of Wisconsin–Madison, but encountered antisemitism in the Economics department and decided to return to government service.[34][35] From 1941 to 1943 Friedman worked on wartime tax policy for the Federal Government, as an advisor to senior officials of the United States Department of the Treasury. As a Treasury spokesman during 1942 he advocated a Keynesian policy of taxation. He helped to invent the payroll withholding tax system, since the federal government badly needed money in order to fight the war.[36] He later said, “I have no apologies for it, but I really wish we hadn’t found it necessary and I wish there were some way of abolishing withholding now.”[37]

Academic career

Early years

In 1940, Friedman accepted a position at the University of Wisconsin–Madison, but left because of differences with faculty regarding United States involvement in World War II. Friedman believed the United States should enter the war.[38] In 1943, Friedman joined the Division of War Research at Columbia University (headed by W. Allen Wallis and Harold Hotelling), where he spent the rest of World War II working as a mathematical statistician, focusing on problems of weapons design, military tactics, and metallurgical experiments.[38][39]

In 1945, Friedman submitted Incomes from Independent Professional Practice (co-authored with Kuznets and completed during 1940) to Columbia as his doctoral dissertation. The university awarded him a PhD in 1946. Friedman spent the 1945–1946 academic year teaching at the University of Minnesota (where his friend George Stigler was employed). On February 12, 1945, his son, David D. Friedman was born.

University of Chicago

In 1946, Friedman accepted an offer to teach economic theory at the University of Chicago (a position opened by departure of his former professor Jacob Viner to Princeton University). Friedman would work for the University of Chicago for the next 30 years. There he contributed to the establishment of an intellectual community that produced a number of Nobel Prize winners, known collectively as the Chicago school of economics.

At that time, Arthur F. Burns, who was then the head of the National Bureau of Economic Research, asked Friedman to rejoin the Bureau’s staff. He accepted the invitation, and assumed responsibility for the Bureau’s inquiry into the role of money in the business cycle. As a result, he initiated the “Workshop in Money and Banking” (the “Chicago Workshop”), which promoted a revival of monetary studies. During the latter half of the 1940s, Friedman began a collaboration with Anna Schwartz, an economic historian at the Bureau, that would ultimately result in the 1963 publication of a book co-authored by Friedman and Schwartz, A Monetary History of the United States, 1867–1960.

Friedman spent the 1954–1955 academic year as a Fulbright Visiting Fellow at Gonville and Caius College, Cambridge. At the time, the Cambridge economics faculty was divided into a Keynesian majority (including Joan Robinson and Richard Kahn) and an anti-Keynesian minority (headed by Dennis Robertson). Friedman speculated that he was invited to the fellowship, because his views were unacceptable to both of the Cambridge factions. Later his weekly columns for Newsweek magazine (1966–84) were well read and increasingly influential among political and business people.[40] From 1968 to 1978, he and Paul Samuelson participated in the Economics Cassette Series, a biweekly subscription series where the economist would discuss the days’ issues for about a half-hour at a time.[41][42]

Friedman was an economic adviser to Republican presidential candidate Barry Goldwater during 1964.

Personal life

Retirement

In 1977, at the age of 65, Friedman retired from the University of Chicago after teaching there for 30 years. He and his wife moved to San Francisco where he became a visiting scholar at the Federal Reserve Bank of San Francisco. From 1977 on, he was affiliated with the Hoover Institution at Stanford University. During the same year, Friedman was approached by the Free To Choose Network and asked to create a television program presenting his economic and social philosophy.

The Friedmans worked on this project for the next three years, and during 1980, the ten-part series, titled Free to Choose, was broadcast by the Public Broadcasting Service (PBS). The companion book to the series (co-authored by Milton and his wife, Rose Friedman), also titled Free To Choose, was the bestselling nonfiction book of 1980 and has since been translated into 14 foreign languages.

Friedman served as an unofficial adviser to Ronald Reagan during his 1980 presidential campaign, and then served on the President’s Economic Policy Advisory Board for the rest of the Reagan Administration. Ebenstein says Friedman was “the ‘guru’ of the Reagan administration.”[43] In 1988 he received the National Medal of Science and Reagan honored him with the Presidential Medal of Freedom. Milton Friedman is known now as one of the most influential economists of the 20th century.[44][45] Throughout the 1980s and 1990s, Friedman continued to write editorials and appear on television. He made several visits to Eastern Europe and to China, where he also advised governments. He was also for many years a Trustee of the Philadelphia Society.[46][47][48]

Later life

According to a 2007 article in Commentary magazine, his “parents were moderately observant [Jews], but Friedman, after an intense burst of childhood piety, rejected religion altogether.”[49] He described himself as an agnostic.[50] Friedman wrote extensively of his life and experiences, especially in 1998 in his memoirs with his wife Rose, titled Two Lucky People.

Death

Friedman died of heart failure at the age of 94 years in San Francisco on November 16, 2006.[51] He was still a working economist performing original economic research; his last column was published in The Wall Street Journal the day after his death.[52] He was survived by his wife (who died on August 18, 2009) and their two children, David, known for the anarcho-capitalist book The Machinery of Freedom, and Janet.

Scholarly contributions

Economics

Friedman was best known for reviving interest in the money supply as a determinant of the nominal value of output, that is, the quantity theory of money. Monetarism is the set of views associated with modern quantity theory. Its origins can be traced back to the 16th-century School of Salamanca or even further; however, Friedman’s contribution is largely responsible for its modern popularization. He co-authored, with Anna Schwartz, A Monetary History of the United States, 1867–1960 (1963), which was an examination of the role of the money supply and economic activity in the U.S. history. A striking conclusion of their research regarded the way in which money supply fluctuations contribute to economic fluctuations. Several regression studies with David Meiselman during the 1960s suggested the primacy of the money supply over investment and government spending in determining consumption and output. These challenged a prevailing, but largely untested, view on their relative importance. Friedman’s empirical research and some theory supported the conclusion that the short-run effect of a change of the money supply was primarily on output but that the longer-run effect was primarily on the price level.

Friedman was the main proponent of the monetarist school of economics. He maintained that there is a close and stable association between inflation and the money supply, mainly that inflation could be avoided with proper regulation of the monetary base’s growth rate. He famously used the analogy of “dropping money out of a helicopter.”,[53] in order to avoid dealing with money injection mechanisms and other factors that would overcomplicate his models.

Friedman’s arguments were designed to counter the popular concept of cost-push inflation, that the increased general price level at the time was the result of increases in the price of oil, or increases in wages; as he wrote,

Inflation is always and everywhere a monetary phenomenon.

— Milton Friedman, 1963.[54]

Friedman rejected the use of fiscal policy as a tool of demand management; and he held that the government’s role in the guidance of the economy should be restricted severely. Friedman wrote extensively on the Great Depression, which he termed the Great Contraction, arguing that it had been caused by an ordinary financial shock whose duration and seriousness were greatly increased by the subsequent contraction of the money supply caused by the misguided policies of the directors of the Federal Reserve.

The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over a decline in the quantity of money by one-third from 1929 to 1933 … Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government.

— Milton Friedman, Two Lucky People, 233[55]

Friedman also argued for the cessation of government intervention in currency markets, thereby spawning an enormous literature on the subject, as well as promoting the practice of freely floating exchange rates. His close friend George Stigler explained, “As is customary in science, he did not win a full victory, in part because research was directed along different lines by the theory of rational expectations, a newer approach developed by Robert Lucas, also at the University of Chicago.”[56] The relationship between Friedman and Lucas, or new classical macroeconomics as a whole, was highly complex. The Friedmanian Phillips curve was an interesting starting point for Lucas, but he soon realized that the solution provided by Friedman was not quite satisfactory. Lucas elaborated a new approach in which rational expectations were presumed instead of the Friedmanian adaptive expectations. Due to this reformulation, the story in which the theory of the new classical Phillips curve was embedded radically changed. This modification, however, had a significant effect on Friedman’s own approach, so, as a result, the theory of the Friedmanian Phillips curve also changed.[57] Moreover, new classical Neil Wallace, who was a graduate student at the University of Chicago between 1960 and 1963, regarded Friedman’s theoretical courses as a mess.[58] This evaluation clearly indicates the broken relationship between Friedmanian monetarism and new classical macroeconomics.

Friedman was also known for his work on the consumption function, the permanent income hypothesis (1957), which Friedman himself referred to as his best scientific work.[59] This work contended that rational consumers would spend a proportional amount of what they perceived to be their permanent income. Windfall gains would mostly be saved. Tax reductions likewise, as rational consumers would predict that taxes would have to increase later to balance public finances. Other important contributions include his critique of the Phillips curve and the concept of the natural rate of unemployment (1968). This critique associated his name, together with that of Edmund Phelps, with the insight that a government that brings about greater inflation cannot permanently reduce unemployment by doing so. Unemployment may be temporarily lower, if the inflation is a surprise, but in the long run unemployment will be determined by the frictions and imperfections of the labor market.

Friedman’s essay “The Methodology of Positive Economics” (1953) provided the epistemological pattern for his own subsequent research and to a degree that of the Chicago School. There he argued that economics as science should be free of value judgments for it to be objective. Moreover, a useful economic theory should be judged not by its descriptive realism but by its simplicity and fruitfulness as an engine of prediction. That is, students should measure the accuracy of its predictions, rather than the ‘soundness of its assumptions’. His argument was part of an ongoing debate among such statisticians as Jerzy Neyman, Leonard Savage, and Ronald Fisher.[60]

Statistics

One of his most famous contributions to statistics is sequential sampling. Friedman did statistical work at the Division of War Research at Columbia, where he and his colleagues came up with the technique. It later became, in the words of The New Palgrave Dictionary of Economics, “the standard analysis of quality control inspection”. The dictionary adds, “Like many of Friedman’s contributions, in retrospect it seems remarkably simple and obvious to apply basic economic ideas to quality control; that however is a measure of his genius.”[61]

Public policy positions

Federal Reserve

Due to its poor performance,[62] Friedman believed that the Federal Reserve Board should be abolished.[63][64] Friedman was deeply critical about Federal Reserve policies, even during the so-called ‘Volcker shock’ that was labelled ‘monetarist.’[65] He further believed that if the money supply was to be centrally controlled (as by the Federal Reserve System) that the preferable way to do it would be with a mechanical system that would keep the quantity of money increasing at a steady rate.

Exchange rates

Friedman was a strong advocate for floating exchange rates throughout the entire Bretton-Woods period. He argued that a flexible exchange rate would make external adjustment possible and allow countries to avoid Balance of Payments crises. He saw fixed exchange rates as an undesirable form of government intervention. The case was articulated in an influential 1953 paper, “The Case for Flexible Exchange Rates”, at a time, when most commentators regarded the possibility of floating exchange rates as a fantasy.[66][67]

School choice

In his 1955 article “The Role of Government in Education”[68] Friedman proposed supplementing publicly operated schools with privately run but publicly funded schools through a system of school vouchers.[69] Reforms similar to those proposed in the article were implemented in, for example, Chile in 1981 and Sweden in 1992.[70] In 1996, Friedman, together with his wife, founded the Friedman Foundation for Educational Choice to advocate school choice and vouchers. In 2016, the Friedman Foundation changed its name to EdChoice to honor the Friedmans’ desire to have the educational choice movement live on without their names attached to it after their deaths.[17]

Conscription

While Walter Oi is credited with establishing the economic basis for a volunteer military, Milton Friedman was a proponent, stating that the draft was “inconsistent with a free society.”[71][72] In Capitalism and Freedom, he argued that conscription is inequitable and arbitrary, preventing young men from shaping their lives as they see fit.[73] During the Nixon administration he headed the committee to research a conversion to paid/volunteer armed force. He would later state that his role in eliminating the conscription in the United States was his proudest accomplishment.[12] Friedman did, however, believe a nation could compel military training as a reserve in case of war time.[73]

Foreign policy

Biographer Lanny Ebenstein noted a drift over time in Friedman’s views from an interventionist to a more cautious foreign policy.[74] He supported US involvement in the Second World War and initially supported a hard line against Communism, but moderated over time.[74] He opposed the Gulf War and the Iraq War.[74] In a spring 2006 interview, Friedman said that the USA’s stature in the world had been eroded by the Iraq War, but that it might be improved if Iraq were to become a peaceful independent country.[75]

Libertarianism and the Republican Party

He served as a member of President Reagan’s Economic Policy Advisory Board starting at 1981. In 1988, he received the Presidential Medal of Freedom and the National Medal of Science. He said that he was a libertarian philosophically, but a member of the U.S. Republican Party for the sake of “expediency” (“I am a libertarian with a small ‘l’ and a Republican with a capital ‘R.’ And I am a Republican with a capital ‘R’ on grounds of expediency, not on principle.”) But, he said, “I think the term classical liberal is also equally applicable. I don’t really care very much what I’m called. I’m much more interested in having people thinking about the ideas, rather than the person.”[76]

Public goods and monopoly

Friedman was supportive of the state provision of some public goods that private businesses are not considered as being able to provide. However, he argued that many of the services performed by government could be performed better by the private sector. Above all, if some public goods are provided by the state, he believed that they should not be a legal monopoly where private competition is prohibited; for example, he wrote:

There is no way to justify our present public monopoly of the post office. It may be argued that the carrying of mail is a technical monopoly and that a government monopoly is the least of evils. Along these lines, one could perhaps justify a government post office, but not the present law, which makes it illegal for anybody else to carry the mail. If the delivery of mail is a technical monopoly, no one else will be able to succeed in competition with the government. If it is not, there is no reason why the government should be engaged in it. The only way to find out is to leave other people free to enter.

— Milton Friedman, Friedman, Milton & Rose D. Capitalism and Freedom, University of Chicago Press, 1982, p. 29

Social security, welfare programs, and negative income tax

After 1960 Friedman attacked Social Security from a free market view stating that it had created welfare dependency.[77]

Friedman proposed that if there had to be a welfare system of any kind, he would replace the existing U.S. welfare system with a negative income tax, a progressive tax system in which the poor receive a basic living income from the government.[78] According to the New York Times, Friedman’s views in this regard were grounded in a belief that while “market forces … accomplish wonderful things”, they “cannot ensure a distribution of income that enables all citizens to meet basic economic needs”.[78]

Drug policy

Friedman also supported libertarian policies such as legalization of drugs and prostitution. During 2005, Friedman and more than 500 other economists advocated discussions regarding the economic benefits of the legalization of marijuana.[79]

Gay rights

Friedman was also a supporter of gay rights.[80][81] He never specifically supported same-sex marriage, instead saying “I do not believe there should be any discrimination against gays.”[81]

Economic freedom

Michael Walker of the Fraser Institute and Friedman hosted a series of conferences from 1986 to 1994. The goal was to create a clear definition of economic freedom and a method for measuring it. Eventually this resulted in the first report on worldwide economic freedom, Economic Freedom in the World.[82] This annual report has since provided data for numerous peer-reviewed studies and has influenced policy in several nations.

Along with sixteen other distinguished economists he opposed the Copyright Term Extension Act and filed an amicus brief in Eldred v. Ashcroft.[83] He supported the inclusion of the word “no-brainer” in the brief.[84]

Friedman argued for stronger basic legal (constitutional) protection of economic rights and freedoms to further promote industrial-commercial growth and prosperity and buttress democracy and freedom and the rule of law generally in society.[85]

Honors, recognition, and influence

George H. Nash, a leading historian of American conservatism, says that by, “the end of the 1960s he was probably the most highly regarded and influential conservative scholar in the country, and one of the few with an international reputation.”[86] Friedman allowed the libertarian Cato Institute to use his name for its biannual Milton Friedman Prize for Advancing Liberty beginning in 2001. A Friedman Prize was given to the late British economist Peter Bauer in 2002, Peruvian economist Hernando de Soto in 2004, Mart Laar, former Estonian Prime Minister in 2006 and a young Venezuelan student Yon Goicoechea in 2008. His wife Rose, sister of Aaron Director, with whom he initiated the Friedman Foundation for Educational Choice, served on the international selection committee.[87][88] Friedman was also a recipient of the Nobel Prize in Economics.

Upon Friedman’s death, Harvard President Lawrence Summers called him “The Great Liberator” saying “… any honest Democrat will admit that we are now all Friedmanites.” He said Friedman’s great popular contribution was “in convincing people of the importance of allowing free markets to operate.”[89]

In 2013 Stephen Moore, a member of the editorial forward of the Wall Street Journal said, “Quoting the most-revered champion of free-market economics since Adam Smith has become a little like quoting the Bible.” He adds, “There are sometimes multiple and conflicting interpretations.”[90]

Nobel Memorial Prize in Economic Sciences

Friedman won the Nobel Memorial Prize in Economic Sciences, the sole recipient for 1976, “for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy.”[4]

Hong Kong

Friedman once said, “If you want to see capitalism in action, go to Hong Kong.”[91] He wrote in 1990 that the Hong Kong economy was perhaps the best example of a free market economy.[92]

One month before his death, he wrote the article “Hong Kong Wrong – What would Cowperthwaite say?” in the Wall Street Journal, criticizing Donald Tsang, the Chief Executive of Hong Kong, for abandoning “positive noninterventionism.”[93] Tsang later said he was merely changing the slogan to “big market, small government,” where small government is defined as less than 20% of GDP. In a debate between Tsang and his rival, Alan Leong, before the 2007 Chief Executive election, Leong introduced the topic and jokingly accused Tsang of angering Friedman to death.

Chile

Main articles: Miracle of Chile and Chicago Boys

During 1975, two years after the military coup that brought military dictator President Augusto Pinochet to power and ended the government of Salvador Allende, the economy of Chile experienced a severe crisis. Friedman and Arnold Harberger accepted an invitation of a private Chilean foundation to visit Chile and speak on principles of economic freedom.[94] He spent seven days in Chile giving a series of lectures at the Universidad Católica de Chile and the (National) University of Chile. One of the lectures was entitled “The Fragility of Freedom” and according to Friedman, “dealt with precisely the threat to freedom from a centralized military government.”[95]

In an April 21, 1975, letter to Pinochet, Friedman considered the “key economic problems of Chile are clearly … inflation and the promotion of a healthy social market economy“.[96] He stated that “There is only one way to end inflation: by drastically reducing the rate of increase of the quantity of money …” and that “… cutting government spending is by far and away the most desirable way to reduce the fiscal deficit, because it … strengthens the private sector thereby laying the foundations for healthy economic growth”.[96] As to how rapidly inflation should be ended, Friedman felt that “for Chile where inflation is raging at 10–20% a month … gradualism is not feasible. It would involve so painful an operation over so long a period that the patient would not survive.” Choosing “a brief period of higher unemployment…” was the lesser evil.. and that “the experience of Germany, … of Brazil …, of the post-war adjustment in the U.S. … all argue for shock treatment“. In the letter Friedman recommended to deliver the shock approach with “… a package to eliminate the surprise and to relieve acute distress” and “… for definiteness let me sketch the contents of a package proposal … to be taken as illustrative” although his knowledge of Chile was “too limited to enable [him] to be precise or comprehensive”. He listed a “sample proposal” of 8 monetary and fiscal measures including “the removal of as many as obstacles as possible that now hinder the private market. For example, suspend … the present law against discharging employees”. He closed, stating “Such a shock program could end inflation in months”. His letter suggested that cutting spending to reduce the fiscal deficit would result in less transitional unemployment than raising taxes.

Sergio de Castro, a Chilean Chicago School graduate, became the nation’s Minister of Finance in 1975. During his six-year tenure, foreign investment increased, restrictions were placed on striking and labor unions, and GDP rose yearly.[97] A foreign exchange program was created between the Catholic University of Chile and the University of Chicago. Many other Chicago School alumni were appointed government posts during and after the Pinochet years; others taught its economic doctrine at Chilean universities. They became known as the Chicago Boys.[98]

Friedman did not criticize Pinochet’s dictatorship at the time, nor the assassinations, illegal imprisonments, torture, or other atrocities that were well known by then.[99] In 1976 Friedman defended his unofficial adviser position with: “I do not consider it as evil for an economist to render technical economic advice to the Chilean Government, any more than I would regard it as evil for a physician to give technical medical advice to the Chilean Government to help end a medical plague.”[100]

Friedman defended his activity in Chile on the grounds that, in his opinion, the adoption of free market policies not only improved the economic situation of Chile but also contributed to the amelioration of Pinochet’s rule and to the eventual transition to a democratic government during 1990. That idea is included in Capitalism and Freedom, in which he declared that economic freedom is not only desirable in itself but is also a necessary condition for political freedom. In his 1980 documentary Free to Choose, he said the following: “Chile is not a politically free system, and I do not condone the system. But the people there are freer than the people in Communist societies because government plays a smaller role. … The conditions of the people in the past few years has been getting better and not worse. They would be still better to get rid of the junta and to be able to have a free democratic system.”[101][102] In 1984, Friedman stated that he has “never refrained from criticizing the political system in Chile.”[95] In 1991 he said: “I have nothing good to say about the political regime that Pinochet imposed. It was a terrible political regime. The real miracle of Chile is not how well it has done economically; the real miracle of Chile is that a military junta was willing to go against its principles and support a free market regime designed by principled believers in a free market. […] In Chile, the drive for political freedom, that was generated by economic freedom and the resulting economic success, ultimately resulted in a referendum that introduced political democracy. Now, at long last, Chile has all three things: political freedom, human freedom and economic freedom. Chile will continue to be an interesting experiment to watch to see whether it can keep all three or whether, now that it has political freedom,that political freedom will tend to be used to destroy or reduce economic freedom.”[103] He stressed that the lectures he gave in Chile were the same lectures he later gave in China and other socialist states.[104]

During the 2000 PBS documentary The Commanding Heights (based on the book), Friedman continued to argue that “free markets would undermine [Pinochet’s] political centralization and political control.”,[105][106] and that criticism over his role in Chile missed his main contention that freer markets resulted in freer people, and that Chile’s unfree economy had caused the military government. Friedman advocated for free markets which undermined “political centralization and political control”.[107]

Iceland

Friedman visited Iceland during the autumn of 1984, met with important Icelanders and gave a lecture at the University of Iceland on the “tyranny of the status quo.” He participated in a lively television debate on August 31, 1984 with socialist intellectuals, including Ólafur Ragnar Grímsson, who later became the president of Iceland.[108] When they complained that a fee was charged for attending his lecture at the University and that, hitherto, lectures by visiting scholars had been free-of-charge, Friedman replied that previous lectures had not been free-of-charge in a meaningful sense: lectures always have related costs. What mattered was whether attendees or non-attendees covered those costs. Friedman thought that it was fairer that only those who attended paid. In this discussion Friedman also stated that he did not receive any money for delivering that lecture.

Estonia

Although Friedman never visited Estonia, his book Free to Choose exercised a great influence on that nation’s then 32-year-old prime minister, Mart Laar, who has claimed that it was the only book on economics he had read before taking office. Laar’s reforms are often credited with responsibility for transforming Estonia from an impoverished Soviet Republic to the “Baltic Tiger.” A prime element of Laar’s program was introduction of the flat tax. Laar won the 2006 Milton Friedman Prize for Advancing Liberty, awarded by the Cato Institute.[109]

United Kingdom

After 1950 Friedman was frequently invited to lecture in Britain, and by the 1970s his ideas had gained widespread attention in conservative circles. For example, he was a regular speaker at the Institute of Economic Affairs (IEA), a libertarian think tank. Conservative politician Margaret Thatcher closely followed IEA programs and ideas, and met Friedman there in 1978. He also strongly influenced Keith Joseph, who became Thatcher’s senior advisor on economic affairs, as well as Alan Walters and Patrick Minford, two other key advisers. Major newspapers, including the Daily Telegraph, The Times, and The Financial Times all promulgated Friedman’s monetarist ideas to British decision-makers. Friedman’s ideas strongly influenced Thatcher and her allies when she became Prime Minister in 1979.[110][111]

Criticism

Econometrician David Hendry criticized part of Friedman’s and Anna Schwartz’s 1982 Monetary Trends.[112] When asked about it during an interview with Icelandic TV in 1984,[113] Friedman said that the criticism referred to a different problem from that which he and Schwartz had tackled, and hence was irrelevant,[114] and pointed out the lack of consequential peer review amongst econometricians on Hendry’s work.[115] In 2006, Hendry said that Friedman was guilty of “serious errors” of misunderstanding that meant “the t-ratios he reported for UK money demand were overstated by nearly 100 per cent”, and said that, in a paper published in 1991 with Neil Ericsson,[116] he had refuted “almost every empirical claim […] made about UK money demand” by Friedman and Schwartz.[117] A 2004 paper updated and confirmed the validity of the Hendry–Ericsson findings through 2000.[118]

Although Keynesian Nobel laureate Paul Krugman praised Friedman as a “great economist and a great man” after Friedman’s death in 2006, and acknowledged his many, widely accepted contributions to empirical economics, Krugman had been, and remains, a prominent critic of Friedman. Krugman has written that “he slipped all too easily into claiming both that markets always work and that only markets work. It’s extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose.”[119]

In her book The Shock Doctrine, author and social activist Naomi Klein criticized Friedman’s economic liberalism, identifying it with the principles that guided the economic restructuring that followed the military coups in countries such as Chile and Indonesia. Based on their assessments of the extent to which what she describes as neoliberal policies contributed to income disparities and inequality, both Klein and Noam Chomsky have suggested that the primary role of what they describe as neoliberalism was as an ideological cover for capital accumulation by multinational corporations.[120]

Visit to Chile

Because of his involvement with the Pinochet government, there were international protests when Friedman was awarded the Nobel Prize in 1976.[121] Friedman was accused of supporting the military dictatorship in Chile because of the relation of economists of the University of Chicago to Pinochet, and a controversial six-day trip[122] he took to Chile during March 1975 (less than two years after the coup that deposed President Salvador Allende). Friedman answered that he never was an adviser to the dictatorship, but only gave some lectures and seminars on inflation, and met with officials, including Augusto Pinochet, while in Chile.[123]

Chilean economist Orlando Letelier asserted that Pinochet’s dictatorship resorted to oppression because of popular opposition to Chicago School policies in Chile.[124] After a 1991 speech on drug legalisation, Friedman answered a question on his involvement with the Pinochet regime, saying that he was never an advisor to Pinochet (also mentioned in his 1984 Iceland interview[95]), but that a group of his students at the University of Chicago were involved in Chile’s economic reforms. Friedman credited these reforms with high levels of economic growth and with the establishment of democracy that has subsequently occurred in Chile.[125][126] In October 1988, after returning from a lecture tour of China during which he had met with Zhao Ziyang, Friedman wrote to The Stanford Daily asking if he should anticipate a similar “avalanche of protests for having been willing to give advice to so evil a government? And if not, why not?”[127]

Capitalism and Freedom

Capitalism and Freedom is a seminal work by Friedman. In the book, Friedman talks about the need to move to a classically liberal society, that free markets would help nations and individuals in the long-run and fix the efficiency problems currently faced by the United States and other major countries of the 1950s and 1960s. He goes through the chapters specifying a specific issue in each respective chapter from the role of government and money supply to social welfare programs to a special chapter on occupational licensure. Friedman concludes Capitalism and Freedom with his “classical liberal” stance, that government should stay out of matters that do not need and should only involve itself when absolutely necessary for the survival of its people and the country. He recounts how the best of a country’s abilities come from its free markets while its failures come from government intervention.[77]

Selected bibliography

  • A Theory of the Consumption Function (1957)
  • A Program for Monetary Stability (Fordham University Press, 1960) 110 pp. online version
  • Capitalism and Freedom (1962), highly influential series of essays that established Friedman’s position on major issues of public policy excerpts
  • A Monetary History of the United States, 1867–1960, with Anna J. Schwartz, 1963; part 3 reprinted as The Great Contraction
  • “The Role of Monetary Policy.” American Economic Review, Vol. 58, No. 1 (Mar., 1968), pp. 1–17 JSTOR presidential address to American Economics Association
  • “Inflation and Unemployment: Nobel lecture”, 1977, Journal of Political Economy. Vol. 85, pp. 451–72. JSTOR
  • Free to Choose: A personal statement, with Rose Friedman, (1980), highly influential restatement of policy views
  • The Essence of Friedman, essays edited by Kurt R. Leube, (1987) (ISBN 0-8179-8662-6)
  • Two Lucky People: Memoirs (with Rose Friedman) ISBN 0-226-26414-9 (1998) excerpt and text search
  • Milton Friedman on Economics: Selected Papers by Milton Friedman, edited by Gary S. Becker (2008)
  • An Interview with Milton Friedman, John B. Taylor (2001). Macroeconomic Dynamics, 5, pp 101–31

See also

Notes

  1. Jump up^ Ebenstein, Lanny (2007). Milton Friedman: A Biography. Palgrave Macmillan. p. 89.
  2. Jump up^ Charles Moore (2013). Margaret Thatcher: The Authorized Biography, Volume One: Not For Turning. Penguin. pp. 576–77.
  3. Jump up^ Lanny Ebenstein (2007). Milton Friedman: A Biography. St. Martin’s Press. p. 208.
  4. ^ Jump up to:a b “Milton Friedman on nobelprize.org”. Nobel Prize. 1976. Retrieved February 20, 2008.
  5. Jump up^ Thomas Sowell (2016-09-16). A Personal Odyssey. Free Press. p. 320. ISBN 0743215087.
  6. Jump up^ The Chicago School: How the University of Chicago Assembled the Thinkers Who Revolutionized Economics and Business
  7. Jump up^ “Milton Friedman”. Commanding Heights. PBS. October 1, 2000. Retrieved September 19, 2011.
  8. Jump up^ Milton Friedman—Economist as Public Intellectual
  9. Jump up^ Mark Skousen (2009-02-28). The Making of Modern Economics: The Lives and Ideas of the Great Thinkers. M.E. Sharpe. p. 407. ISBN 0-7656-2227-0.
  10. Jump up^ Among macroeconomists, the “natural” rate has been increasingly replaced by James Tobin‘s NAIRU, the non-accelerating inflation rate of unemployment, which is seen as having fewer normative connotations.
  11. Jump up^ Nobel prize winner Paul Krugman stated that, “In 1968 in one of the decisive intellectual achievements of postwar economics, Friedman not only showed why the apparent tradeoff embodied in the idea of the Phillips curve was wrong; he also predicted the emergence of combined inflation and high unemployment … dubbed ‘stagflation.” Paul Krugman, Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations (1995) p. 43 online
  12. ^ Jump up to:a b Doherty, Brian (June 1, 1995). “Best of Both Worlds”. Reason Magazine. Retrieved October 24, 2009
  13. Jump up^ Edward Nelson, “Friedman’s Monetary Economics in Practice,” Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, April 13, 2011. Nelson stated, “in important respects, the overall monetary and financial policy response to the crisis can be viewed as Friedman’s monetary economics in practice.” and “Friedman’s recommendations for responding to a financial crisis largely lined up with the principal financial and monetary policy measures taken since 2007.” Nelson, “Review,” in Journal of Economic Literature (Dec, 2012) 50#4 pp. 1106–09
  14. Jump up^ Lanny Ebenstein (2007). Milton Friedman: A Biography. St. Martin’s Press. p. 208.
  15. Jump up^ Charles Moore (2013). Margaret Thatcher: The Authorized Biography, Volume One: Not For Turning. Penguin. pp. 576–77.
  16. Jump up^ Milton Friedman (1912–2006)
  17. ^ Jump up to:a b Sullivan, Maureen (July 30, 2016). “Milton Friedman’s Name Disappears From Foundation, But His School-Choice Beliefs Live On”. Forbes. Retrieved 14 September 2016.
  18. Jump up^ “Capitalism and Friedman” (editorial), The Wall Street Journal November 17, 2006
  19. Jump up^ Václav Klaus (January 29, 2007). “Remarks at Milton Friedman Memorial Service”. Retrieved August 22, 2008.
  20. Jump up^ Johan Norberg, Defaming Milton Friedman: Naomi Klein’s disastrous yet popular polemic against the great free market economist, Reason Magazine, Washington, D.C., Oct. 2008
  21. Jump up^ Friedman 1999, p. 506
  22. Jump up^ Davis, William L, Bob Figgins, David Hedengren, and Daniel B. Klein. “Economic Professors’ Favorite Economic Thinkers, Journals, and Blogs”, Econ Journal Watch 8(2): 126–46, May 2011.
  23. Jump up^ “Milton Friedman, a giant among economists”. The Economist. November 23, 2006. Retrieved February 20, 2008.
  24. Jump up^ “Who’s who in American Jewry”. 1980.
  25. Jump up^ Alan O. Ebenstein, Milton Friedman: a biography (2007) p. 10; Milton & Rose Friedman, Two Lucky People. Memoirs, Chicago 1998, p. 22.
  26. Jump up^ Eamonn Butler, Milton Friedman (2011) ch 1
  27. Jump up^ Alan O. Ebenstein, Milton Friedman: a biography (2007) pp. 5–12
  28. Jump up^ “Milton Friedman and his start in economics”. Young America’s Foundation. August 2006. Retrieved March 12, 2012.
  29. Jump up^ Ebenstein, Milton Friedman: a biography (2007) pp. 13–30
  30. Jump up^ Feeney, Mark (November 16, 2006). “Nobel laureate economist Milton Friedman dies at 94”. The Boston Globe. Retrieved February 20, 2008.
  31. Jump up^ Friedman 1999, p. 59
  32. Jump up^ “Right from the Start? What Milton Friedman can teach progressives.” (PDF). J. Bradford DeLong. Retrieved February 20, 2008.
  33. Jump up^ Bernanke 2004, p. 7
  34. Jump up^ Friedman 1999, p. 42
  35. Jump up^ Friedman 1999, pp. 84–85
  36. Jump up^ Milton Friedman; Rose D. Friedman (1999). Two Lucky People: Memoirs. University of Chicago Press. pp. 122–23. ISBN 9780226264158.
  37. Jump up^ Doherty, Brian (June 1995). “Best of Both Worlds”. Reason. Retrieved July 28, 2010.
  38. ^ Jump up to:a b “Milton Friedman Biography – Academy of Achievement”. Achievement.org. Retrieved 2014-04-22.
  39. Jump up^ Philip Mirowski (2002). Machine Dreams: Economics Becomes a Cyborg Science. Cambridge University Press. pp. 202–03. ISBN 9780521775267.
  40. Jump up^ CATO, “Letter from Washington,” National Review, September 19, 1980, Vol. 32 Issue 19, p. 1119
  41. Jump up^ Rose and Milton Friedman
  42. Jump up^ Inventory of the Paul A. Samuelson Papers, 1933–2010 and undated | Finding Aids | Rubenstein Library
  43. Jump up^ Ebenstein (2007). Milton Friedman: A Biography. p. 208.
  44. Jump up^ “Milton Friedman: An enduring legacy”. The Economist. November 17, 2006. Retrieved February 20, 2008.
  45. Jump up^ Sullivan, Patricia (November 17, 2006). “Economist Touted Laissez-Faire Policy”. The Washington Post. Retrieved February 20, 2008.
  46. Jump up^ Milton Friedman – Biography | Cato Institute
  47. Jump up^ Trustees
  48. Jump up^ Milton Friedman
  49. Jump up^ Lanny Ebenstein, Milton Friedman, Commentary, May 2007, p. 286.
  50. Jump up^ Asman, David (November 16, 2006). “‘Your World’ Interview With Economist Milton Friedman”. Fox News. Retrieved August 2, 2011.
  51. Jump up^ Christie, Jim (November 16, 2006). “Free market economist Milton Friedman dead at 94”. Reuters. Retrieved February 20, 2008.
  52. Jump up^ Peter Robinson (2008-10-17). “What Would Milton Friedman Say?”. forbes.com. Retrieved 2014-12-13.
  53. Jump up^ Optimum Quantity of Money. Aldine Publishing Company. 1969. p. 4.
  54. Jump up^ Friedman, Milton. Inflation: Causes and Consequences. New York: Asia Publishing House.
  55. Jump up^ “Milton Friedman: END THE FED”. Themoneymasters.com. Retrieved 2014-04-22.
  56. Jump up^ Friedman, Milton (1969). Memoirs of an Unregulated Economist. Aldine Publishing Company. p. 4.
  57. Jump up^ Galbács, Peter (2015). The Theory of New Classical Macroeconomics. A Positive Critique. Heidelberg/New York/Dordrecht/London: Springer. doi:10.1007/978-3-319-17578-2. ISBN 978-3-319-17578-2.
  58. Jump up^ Kevin Hoover; Warren Young (2011). Rational Expectations – Retrospect and Prospect (PDF). Durham: Center for the History of Political Economy at Duke University.
  59. Jump up^ “Charlie Rose Show”. December 26, 2005. Missing or empty |series= (help)
  60. Jump up^ David Teira, “Milton Friedman, the Statistical Methodologist,” History of Political Economy (2007) 39#3 pp. 511–27,
  61. Jump up^ The Life and Times of Milton Friedman – Remembering the 20th century’s most influential libertarian
  62. Jump up^ https://www.youtube.com/watch?v=m6fkdagNrjI “There in no institution in the US that has such a high public standing and such a poor record of performance” “It’s done more harm than good”
  63. Jump up^ “My first preference would be to abolish the Federal Reserve” on YouTube
  64. Jump up^ https://www.youtube.com/watch?v=m6fkdagNrjI “I have long been in favor of abolishing it.”
  65. Jump up^ Reichart Alexandre & Abdelkader Slifi (2016). ‘The Influence of Monetarism on Federal Reserve Policy during the 1980s.’ Cahiers d’économie Politique/Papers in Political Economy, (1), pp. 107–50. https://www.cairn.info/revue-cahiers-d-economie-politique-2016-1-page-107.htm
  66. Jump up^ [1]
  67. Jump up^ [2]
  68. Jump up^ Friedman, Milton (1955). Solo, Robert A., ed. “The Role of Government in Education,” as printed in the book Economics and the Public Interest (PDF). Rutgers University Press. pp. 123–144.
  69. Jump up^ Leonard Ross and Richard Zeckhauser (December 1970). “Review: Education Vouchers”. The Yale Law Journal. 80 (2): 451–61. doi:10.2307/795126. JSTOR 795126.
  70. Jump up^ Martin Carnoy (August 1998). “National Voucher Plans in Chile and Sweden: Did Privatization Reforms Make for Better Education?”. Comparative Education Review. 42 (3): 309–37. doi:10.1086/447510. JSTOR 1189163.
  71. Jump up^ Milton Friedman (1991). The War on Drugs. America’s Drug Forum.
  72. Jump up^ Rostker, Bernard (2006). I Want You!: The Evolution of the All-Volunteer Force. Rand Corporation. p. 4. ISBN 978-0-8330-3895-1.
  73. ^ Jump up to:a b Friedman, Milton (November 15, 2002). Capitalism and Freedom. University Of Chicago Press. p. 36.
  74. ^ Jump up to:a b c Ebenstein, Lanny (2007). Milton Friedman: a biography. New York: St. Martin’s Press. pp. 231–32. ISBN 978-0-230-60409-4.
  75. Jump up^ Ebenstein, Lanny (2007). Milton Friedman: a biography. New York: St. Martin’s Press. p. 243. ISBN 978-0-230-60409-4.
  76. Jump up^ Friedman and Freedom. Queen’s Journal. Archived from the original on August 11, 2006. Retrieved February 20, 2008., Interview with Peter Jaworski. The Journal, Queen’s University, March 15, 2002 – Issue 37, Volume 129
  77. ^ Jump up to:a b Milton Friedman; Rose D. Friedman (1962). Capitalism and Freedom: Fortieth Anniversary Edition. U. of Chicago Press. ISBN 9780226264189.
  78. ^ Jump up to:a b Frank, Robert H (2006-11-23). “The Other Milton Friedman: A Conservative With a Social Welfare Program”. New York Times. The New York Times.
  79. Jump up^ “An open letter”. Prohibition Costs. Retrieved November 9, 2012.
  80. Jump up^ “Milton Friedman”. Liberal Democratic Party (Australia). Retrieved February 19, 2013.
  81. ^ Jump up to:a b Alan O. Ebenstein, Milton Friedman: A Biography (2007) p. 228
  82. Jump up^ “Economic Freedom of the World project”. Fraser Institute. Retrieved 16 February 2016.
  83. Jump up^ “In the Supreme Court of the United States” (PDF). Harvard Law School. Retrieved February 20, 2008.
  84. Jump up^ Lessig, Lawrence (November 19, 2006). “only if the word ‘no-brainer’ appears in it somewhere: RIP Milton Friedman (Lessig Blog)”. Lessig.org. Retrieved April 2, 2013.
  85. Jump up^ “A New British Bill of Rights: The Case For”. ISR Online Guide. Retrieved 16 February 2016.
  86. Jump up^ Lanny Ebenstein (2007). Milton Friedman: A Biography. Palgrave Macmillan. p. 260.
  87. Jump up^ Selection Committee Announced for the 2008 Milton Friedman Prize for Advancing Liberty,” Cato Institute, September 5, 2007. Accessed 4 January 2014.
  88. Jump up^ Milton Friedman Prize page at Cato Institute website. Accessed 5 January 2014.
  89. Jump up^ Summers, Larry (November 19, 2006). “The Great Liberator”. The New York Times.
  90. Jump up^ Stephen Moore, What Would Milton Friedman Say?” Wall Street Journal, May 30, 2013 p. A13
  91. Jump up^ Ingdahl, Waldemar (March 22, 2007). “Real Virtuality”. The American. Retrieved February 20, 2008.
  92. Jump up^ Friedman, Milton; Friedman, Rose (1990). Free to Choose: A Personal Statement. Harvest Books. p. 34. ISBN 0-15-633460-7.
  93. Jump up^ Friedman, Milton (October 6, 2006). “Dr. Milton Friedman”. Opinion Journal. Retrieved February 20, 2008.
  94. Jump up^ Letter from Arnold Harberger to Stig Ramel as reprinted in the Wall Street Journal 12/10/1976, and in Two Lucky People: Memoirs By Milton Friedman, Rose D. Friedman. Appendix A, pp. 598–99. Accessible at books.google.com
  95. ^ Jump up to:a b c Milton Friedman (August 31, 1984). Iceland Television Debate (Flash Video) (Television production). Reykjavík: Icelandic State Television. Event occurs at 009:48:00. Retrieved June 27, 2010.
  96. ^ Jump up to:a b [http:// Two Lucky People: Memoirs By Milton Friedman, Rose D. Friedman. Appendix A, pp. 591–93. Letter from Friedman to Pinochet, April 21, 1975.]
  97. Jump up^ Mask II, William Ray (May 2013). The Great Chilean Recovery: Assigning Responsibility For The Chilean Miracle(s) (Thesis). California State University, Fresno.
  98. Jump up^ “Chile and the “Chicago Boys””. The Hoover Institution. Stanford University. Retrieved 20 June 2014.
  99. Jump up^ O’Shaughnessy, Hugh (December 11, 2006). “General Augusto Pinochet”. The Independent. Retrieved February 20, 2008.
  100. Jump up^ Newsweek of June 14, 1976
  101. Jump up^ “Free to Choose Vol. 5”. Archived from the original on February 9, 2008. Retrieved February 20, 2008.
  102. Jump up^ Frances Fox Piven vs. Milton Friedman, Thomas Sowell, debate, 1980, YouTube.
  103. Jump up^ The Smith Center: Milton Friedman’s lecture, “Economic Freedom, Human Freedom, Political Freedom”, by Milton Friedman, delivered November 1, 1991.
  104. Jump up^ Friedman 1999, pp. 600–01
  105. Jump up^ “Interview with Jeffery Sachs on the “Miracle of Chile””. PBS. Retrieved February 20, 2008.
  106. Jump up^ “Commanding Heights: Milton Friedman”. PBS. Retrieved December 29, 2008.
  107. Jump up^ “Milton Friedman interview”. PBS. Retrieved February 20, 2008.
  108. Jump up^ Friedman, Milton; Grímsson, Ólafur Ragnar. Milton Friedman on Icelandic State Television in 1984.
  109. Jump up^ “Mart Laar”. Cato Institute. Retrieved February 20, 2008.
  110. Jump up^ John F. Lyons (2013). America in the British Imagination: 1945 to the Present. Palgrave Macmillan. p. 102.
  111. Jump up^ Subroto Roy & John Clarke, eds., Margaret Thatcher’s Revolution: How it Happened and What it Meant (Continuum 2005)
  112. Jump up^ David F. Hendry; Neil R. Ericsson (October 1983). “Assertion without Empirical Basis: An Econometric Appraisal of ‘Monetary Trends in … the United Kingdom’ by Milton Friedman and Anna Schwartz,” in Monetary Trends in the United Kingdom, Bank of England Panel of Academic Consultants, Panel Paper No. 22, pp. 45–101.See also Federal Reserve International Finance Discussion Paper No. 270 (December 1985), which is a revised and shortened version of Hendry–Ericsson 1983.
  113. Jump up^ “M.Friedman – Iceland TV (1984)”. YouTube. Retrieved 16 February 2016.
  114. Jump up^ van Steven Moore, CMA (1984-08-31). “Milton Friedman – Iceland 2 of 8”. YouTube. Retrieved 2014-04-22.
  115. Jump up^ J. Daniel Hammond (2005). Theory and Measurement: Causality Issues in Milton Friedman’s Monetary Economics. Cambridge U.P. pp. 193–99.
  116. Jump up^ David F. Hendry; Neil R. Ericsson (July 1989). “An Econometric Analysis of UK Money Demand in Monetary Trends in the United States and the United Kingdom by Milton Friedman and Anna J. Schwartz” (PDF). International Finance Discussion Papers: 355. Federal Reserve. Retrieved 2 August 2013.
  117. Jump up^ Hendry, David F. (25 April 2013). “Friedman’s t-ratios were overstated by nearly 100%”. ft.com. Retrieved 1 May 2013.
  118. Jump up^ Escribano, Alvaro (2004). “Nonlinear error correction: The case of money demand in the United Kingdom (1878–2000)” (PDF). Macroeconomic Dynamics. 8 (1): 76–116. doi:10.1017/S1365100503030013.
    Escribano’s approach had already been recognized by Friedman, Schwartz, Hendry et al. (p. 14 of the pdf) as yielding significant improvements over previous money demand equations.
  119. Jump up^ The New York Review of Books, Who Was Milton Friedman?, February 15, 2007
  120. Jump up^ Noam Chomsky (1999). Profit Over People: Neoliberalism and Global Order. New York, NY: Seven Stories Press.
  121. Jump up^ Feldman, Burton (2000). “Chapter 9: The Economics Memorial Prize”. The Nobel Prize: A History of Genius, Controversy, and Prestige. New York: Arcade Publishing. p. 350. ISBN 1-55970-537-X.
  122. Jump up^ O’Shaughnessy, Hugh (11 December 2006). “General Augusto Pinochet”. The Independent.
  123. Jump up^ Friedman, Milton; Friedman, Rose D. “Two Lucky People: One Week in Stockholm”. Hoover Digest: Research and Opinion on Public Policy. 1998 (4).
  124. Jump up^ Orlando Letelier, “Economic Freedom’s Awful Toll”, The Nation, August 28, 1976.
  125. Jump up^ The Drug War as a Socialist Enterprise, Milton Friedman, From: Friedman & Szasz on Liberty and Drugs, edited and with a Preface by Arnold S. Trebach and Kevin B. Zeese. Washington, D.C.: The Drug Policy Foundation, 1992.
  126. Jump up^ YouTube clip: Milton Friedman – Pinochet and Chile
  127. Jump up^ Friedman, Milton; Friedman, Rose D. Two Lucky People: Memoirs. University of Chicago Press. ISBN 9780226264158. Retrieved 18 October 2016.

References

  • Bernanke, Ben (2004). Essays on the Great Depression. Princeton University Press. ISBN 0-691-11820-5
  • Butler, Eamonn (2011). Milton Friedman. Harriman Economic Essentials.
  • Ebenstein, Alan O. (2007). Milton Friedman: a biography.
  • Friedman, Milton (1999). Two Lucky People: Memoirs. University of Chicago Press. ISBN 0-226-26415-7.
  • Wood, John Cunningham, and Ronald N. Wood, ed. (1990), Milton Friedman: Critical Assessments, v. 3. Scroll to chapter-preview links. Routledge.

Further reading

External links

Free to Choose (original series) https://www.youtube.com/watch?v=f1Fj5tzuYBE

Videos

Robert Mundell

From Wikipedia, the free encyclopedia
Robert Mundell
Rmundell.jpg
Born October 24, 1932 (age 84)
Kingston, Ontario, Canada
Nationality Canadian
Institution Johns Hopkins University (1959–61, 1997–98, 2000–01)
University of Chicago (1965–72)
Graduate Institute of International Studies in Geneva, Switzerland (1965–75) [1]
University of Waterloo (1972–74)
McGill University (1989–1990)[2]
Columbia University (1974 – present)
Chinese University of Hong Kong (2009 – present)
Field Monetary economics
School or
tradition
Supply-side economics
Alma mater London School of Economics
UBC Vancouver School of Economics
University of Washington
Massachusetts Institute of Technology
University of Waterloo
Doctoral
advisor
Charles Kindleberger[3]
Doctoral
students
Jacob A. Frenkel
Rudi Dornbusch[4]
Carmen Reinhart[5]
Influences Ludwig Von Mises
Influenced Arthur Laffer
Jude Wanniski
Michael Mussa
Contributions Mundell–Fleming model
Optimum currency areas
Research on the gold standard
Awards Nobel Memorial Prize in Economics (1999)
Information at IDEAS / RePEc

Robert Alexander Mundell, CC (born October 24, 1932) is a Nobel Prize-winning Canadian economist. Currently, he is a professor of economics at Columbia University and the Chinese University of Hong Kong.

He received the Nobel Memorial Prize in Economics in 1999 for his pioneering work in monetary dynamics and optimum currency areas. Mundell is known as the “father”[6] of the Euro, as he laid the groundwork for its introduction through this work and helped to start the movement known as supply-side economics. Mundell is also known for the Mundell–Fleming model and Mundell–Tobin effect.

Background

Mundell was born in Kingston, Ontario, Canada. He earned his BA in Economics at the University of British Columbia in Vancouver, Canada, and his MA at the University of Washington in Seattle. After studying at the University of British Columbia and at The London School of Economics in 1956,[7] he then attended the Massachusetts Institute of Technology (MIT), where he obtained his PhD in Economics in 1956. In 2006 Mundell earned an honorary Doctor of Laws degree from the University of Waterloo in Canada.[8] He was Professor of Economics and Editor of the Journal of Political Economy at the University of Chicago from 1965 to 1972, Chairman of the Department of Economics at the University of Waterloo 1972 to 1974 and since 1974 he was Professor of Economics at Columbia University.[9] He also held the post of Repap Professor of Economics at McGill University.[10][11]

Career

Since 1974 he has been a professor in the Economics department at Columbia University; since 2001 he has held Columbia’s highest academic rank – University Professor. After completing his post-doctoral fellowship at the University of Chicago in 1957, he began teaching economics at Stanford University, and then Paul H. Nitze School of Advanced International Studies at Johns Hopkins University during 1959–1961.[2] In 1961, he went on to staff the International Monetary Fund. Mundell returned to academics as professor of economics at the University of Chicago from 1966 to 1971, and then served as professor during summers at the Graduate Institute of International Studies in Geneva until 1975. In 1989, he was appointed to the post of Repap Professor of Economics at McGill University.,[10][11] In the 1970s, he laid the groundwork for the introduction of the euro through his pioneering work in monetary dynamics and optimum currency forms for which he won the 1999 Nobel Prize in Economics. During this time he continued to serve as an economic adviser to the United Nations, the IMF, the World Bank, the European Commission, the Federal Reserve Board, the United States Department of Treasury and the governments of Canada and other countries. He is currently the Distinguished Professor-at-Large of The Chinese University of Hong Kong.

Among his major contributions are:

Awards

Mundell was awarded the Guggenheim Fellowship in 1971 and the Nobel Memorial Prize in Economics in 1999. In 2002 he was made a Companion of the Order of Canada.

In 1992, Mundell received the Docteur Honoris Causa from the University of Paris. Mundell’s honorary professorships and fellowships were from Brookings Institution, the University of Chicago, the University of Southern California, McGill University, the University of Pennsylvania, the Bologna Center and Renmin University of China. He became a fellow of the American Academy of Arts and Sciences in 1998. In June 2005 he was awarded the Global Economics Prize World Economics Institute in Kiel, Germany and in September 2005 he was made a Cavaliere di Gran Croce del Reale Ordine del Merito sotto il Titolo di San Ludovico by Principe Don Carlo Ugo di Borbone Parma.

The Mundell International University of Entrepreneurship in the Zhongguancun district of Beijing, People’s Republic of China is named in his honor.

International monetary flows

Mundell is best known in politics for his support of tax cuts and supply-side economics; however, in economics it is for his work on currency areas[12] and international exchange rates[13] that he was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel by the Bank of Sweden (Sveriges Riksbank). Nevertheless, supply-side economics featured prominently in his Bank of Sweden prize speech.

In the 1960s, Canada, of which Mundell is a native, floated its exchange: this caused Mundell to begin investigating the results of floating exchange rates, a phenomenon not widely seen since the 1930s “Stockholm School” successfully lobbied Sweden to leave the gold standard.

In 1962, along with Marcus Fleming, he co-authored the Mundell–Fleming model of exchange rates, and noted that it was impossible to have domestic autonomy, fixed exchange rates, and free capital flows: no more than two of those objectives could be met. The model is, in effect, an extension of the IS/LM model applied to currency rates.

According to Mundell’s analysis:

  • Discipline under the Bretton Woods system was more due to the US Federal Reserve than to the discipline of gold.
  • Demand side fiscal policy would be ineffective in restraining central banks under a floating exchange rate system.
  • Single currency zones relied, therefore, on similar levels of price stability, where a single monetary policy would suffice for all.

His analysis led to his conclusion that it was a disagreement between Europe and the United States over the rate of inflation, partially to finance the Vietnam War, and that Bretton Woods disintegrated because of the undervaluing of gold and the consequent monetary discipline breakdown. There is a famous point/counterpoint over this issue between Mundell and Milton Friedman.[14]

This work later led to the creation of the euro and his prediction that leaving the Bretton Woods system would lead to “stagflation” so long as highly progressive income tax rates applied. In 1974, he advocated a drastic tax reduction and a flattening of income tax rates.

Mundell, though lionized by some conservatives, has many of his harshest critics from the right: he denies the need for a fixed gold based currency or currency board[citation needed] (he still often recommends this as a policy in hyperinflationary environments) and he is both a fiscal and balance of payments deficit hawk. He is well known for stating that in a floating exchange rate system, expansion of the money supply can come about only by a positive balance of payments.

In 2000, he predicted that before 2010, the euro zone would expand to cover 50 countries, while the dollar would spread throughout Latin America, and much of Asia would look towards the yen.[15] Such predictions have proved highly inaccurate.

Nobel Prize winner

Mundell won the Nobel Memorial Prize in Economic Science in 1999 and gave as his prize lecture a speech titled “A Reconsideration of the Twentieth Century”. According to the Nobel Prize Committee, he got the honor for “his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas”.

Mundell concluded in that lecture that “the international monetary system depends only on the power configuration of the countries that make it up”. He divided the entire twentieth century into three parts by different periods of time:

  • The first third of the century, from its beginning to the Great Depression of the 1930s, economics was dominated by the confrontation of the Federal Reserve System with the gold standard.
  • The second third of the century was from World War II to 1973, when the international monetary system was dominated by fixing the price of gold with the US dollar.
  • The last third of the century started with the destruction of the old monetary system due to the problem of inflation.

With the destruction of the old monetary system, a new international monetary system was finally founded. Controlling inflation by each country became a main topic during this era.

Television appearances

Mundell has appeared on CBS‘s Late Show with David Letterman. His first appearance was on October 17, 2002[16] where he gave The Top 10 List on “Ways My Life has Changed Since Winning the Nobel Prize.” In March 2004[17] he told “You might be a redneck” jokes followed in May 2004[18] with “Yo Mama” jokes. In September 2004[19] he appeared again, this time to read excerpts from Paris Hilton‘s memoir at random moments throughout the show. In November 2005[20] he told a series of Rodney Dangerfield‘s jokes. On February 7, 2006[21] he read Grammy Award nominated song lyrics, the night before CBS aired the 48th Grammy Awards.

Mundell also appeared on Bloomberg Television many times.

Mundell has also appeared on China Central Television‘s popular Lecture Room series. Professor Mundell was also a special guest making the ceremonial first move in Game Five of the 2010 World Chess Championship between Viswanathan Anand and Veselin Topalov.

Mundell started the Pearl Spring Chess Tournament, a double round robin tournament with six players. The first tournament in 2008 was won by the Bulgarian, Veselin Topalov. The next two: 2009–2010 was won by the Norwegian, Magnus Carlsen.

See also

References

  1. Jump up^ http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1999/mundell-bio.html
  2. ^ Jump up to:a b Nobel Prize Winners from Johns Hopkins University
  3. Jump up^ Essays in the theory of international capital movementspage 3. Retrieved September 12, 2016.
  4. Jump up^ RUDI DORNBUSCH by Stanley Fischer – Project Syndicate
  5. Jump up^ Warsh, David (November 1, 2009). “What The Woman Lived”. Economic Principals. Retrieved October 17, 2016.
  6. Jump up^ “Mr. Mundell, known as the father of the euro”[dead link]
  7. Jump up^ “Robert Mundell – Nobel Prize Winners – Key facts – About LSE – Home”. .lse.ac.uk. March 13, 2009. Retrieved January 1, 2012.
  8. Jump up^ [1]
  9. Jump up^ http://www.polyu.edu.hk/iao/nobel2009/mundell_bio.pdf
  10. ^ Jump up to:a b “Robert A. Mundell – Biography”. Nobelprize.org. Retrieved January 1, 2012.
  11. ^ Jump up to:a b “Biography | The Works of Robert Mundell”. Robertmundell.net. Retrieved January 1, 2012.
  12. Jump up^ A Theory of Optimum Currency Areas; The American Economic Review, Vol. 51, No. 4, pp. 657–665, 1961
  13. Jump up^ Capital Mobility, and Stabilization Policy under Fixed and Flexible Exchange Rates; Revue Canadienne d’Economique et de Science Politique, Vol. 29, No. 4, pp. 475–485, 1963
  14. Jump up^ “Mundell-Friedman debate” (PDF). Retrieved January 1, 2012.
  15. Jump up^ Mark Milner and Charlotte Denny (January 14, 2000). “The new endangered species | Business”. London: The Guardian. Retrieved January 1, 2012.
  16. Jump up^ show #1891 Archived August 15, 2006, at the Wayback Machine.
  17. Jump up^ show #2144 Archived October 17, 2006, at the Wayback Machine.
  18. Jump up^ show #2162 Archived May 16, 2006, at the Wayback Machine.
  19. Jump up^ show # 2238 Archived February 23, 2006, at the Wayback Machine.
  20. Jump up^ show #2466 Archived December 15, 2005, at the Wayback Machine.
  21. Jump up^ show #2505 Archived May 16, 2006, at the Wayback Machine.

External links

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Immigration Law Enforcement — Deporting and Removing The 30-50 Million Illegal Aliens In The United States — 16 Years To Rollback The Invasion — Ending Santuary Cities By Cutting Off All Federal Funding — Videos

Posted on January 4, 2017. Filed under: American History, Articles, Banking, Blogroll, College, Communications, Congress, Constitution, Corruption, Documentary, Economics, Education, Faith, Family, Federal Government Budget, Fiscal Policy, Foreign Policy, Freedom, government, government spending, history, Law, liberty, Life, Links, Literacy, media, Monetary Policy, Money, Narcissism, People, Philosophy, Photos, Political Correctness, Politics, Private Sector, Psychology, Public Sector, Radio, Radio, Rants, Raves, Raymond Thomas Pronk, Security, Tax Policy, Taxation, Taxes, Unemployment, Unions, Video, Wealth, Welfare, Wisdom, Writing | Tags: , , , , , |

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Image result for us border patrol REMOVALS of ILLEGAL ALIENS APPREHENSIONS 2000-2015

Image result for us border patrol REMOVALS of ILLEGAL ALIENS APPREHENSIONS 2000-2015

Image result for us border patrol REMOVALS of ILLEGAL ALIENS APPREHENSIONS 2000-2015

Image result for us border patrol REMOVALS of ILLEGAL ALIENS APPREHENSIONS 2000-2015

Image result for us border patrol REMOVALS of ILLEGAL ALIENS APPREHENSIONS 2000-2015

Image result for us border patrol REMOVALS of ILLEGAL ALIENS APPREHENSIONS 2000-2015

Image result for us border patrol REMOVALS of ILLEGAL ALIENS APPREHENSIONS 2000-2015

Image result for us border patrol DEPORTATIONS of ILLEGAL ALIENS APPREHENSIONS 2000-2015

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Pres Trump To Start DEPORTING ILLEGAL IMMIGRANTS From OBAMA AMNESTY First Day In Office, what next?

Donald Trump and the wall with Mexico… will it happen? BBC Newsnight

The Illegal Invasion of America

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How Many Illegal Aliens Are in the US? – Walsh – 1

Uploaded on Oct 20, 2007

How Many Illegal Aliens Are in the United States? Presentation by James H. Walsh, Associate General Counsel of the former INS – part 1.

Census Bureau estimates of the number of illegals in the U.S. are suspect and may represent significant undercounts. The studies presented by these authors show that the numbers of illegal aliens in the U.S. could range from 20 to 38 million.

On October 3, 2007, a press conference and panel discussion was hosted by Californians for Population Stabilization (http://www.CAPSweb.org) and The Social Contract (http://www.TheSocialContract.com) to discuss alternative methodologies for estimating the true numbers of illegal aliens residing in the United States.

This is a presentation of five panelists presenting at the National Press Club, Washington, D.C. on October 3, 2007. The presentations are broken into a series of video segments:

Wayne Lutton, Introduction: http://www.youtube.com/watch?v=q5KHQR…

Diana Hull, part 1: http://www.youtube.com/watch?v=f6WvFW…

Diana Hull, part 2: http://www.youtube.com/watch?v=QYuRNY…

James H Walsh, part 1: http://www.youtube.com/watch?v=MB0RkV…

James H. Walsh, part 2: http://www.youtube.com/watch?v=lbmdun…

Phil Romero: http://www.youtube.com/watch?v=A_ohvJ…

Fred Elbel: http://www.youtube.com/watch?v=QNTJGf…

How Many Illegal Aliens Are in the US? – Walsh – 2

Obama’s Amnesty & How Illegal Immigration Affects Us

 

ICE Deported Less Than 1 Percent Of All Illegal Aliens in FY2016

If anyone out there still believes Obama to be the “deporter-in-chief,” now would be a good time to stop.

The moniker is an oft-cited, erroneous claim repeated ad nauseam by amnesty activists or liberal policymakers looking to justify the president’s lackadaisical immigration enforcement policies. But unfortunately for Americans who think the law is actually worth the paper it’s printed on, this claim doesn’t hold up against the data. This inaccurate assertion is based on the number of “removals and returns” cited each year by the administration, but fails to distinguish how many of those “returns” occurred at the border (i.e., not a true “deportation”) versus how many persons are actually arrested and removed from inside the United States – a significantly smaller number, and dropping.

And it doesn’t take much digging to find out. U.S. Immigration and Customs Enforcement recently released its Fiscal Year 2016 report which stated that as a whole, the Department of Homeland Security – which houses both U.S. Customs and Border Protection and Immigration and Customs Enforcement – removed or returned a total of 450,954 illegal aliens last year alone, each counted as a “deportation” by the term’s weakest definition.

However, a closer look at the data reveals that the vast majority of these “deportations” claimed by the Obama administration took place at or near the border – meaning they weren’t actual “deportations” at all. These were folks, primarily single adults, who got caught crossing the border from Mexico and were either turned around or, in the case of non-Mexicans, processed and sent back to their home country.

In fact, of the roughly 451,000 aliens who were removed from the country last year, only 65,332 of them – about 14 percent – were apprehended in the interior of the United States, according to DHS’s own report. The vast majority of these, by the administration’s own admission, were criminal aliens who’d been convicted of a violent felony or were a threat to national security.

Only five percent of all removals (less than 23,000) were Priority 2 cases, which includes people who unlawfully crossed into the U.S. since 2014. An even smaller one percent (less than 5,000) were aliens who’d been given a final order of removal in the last 2-3 years.

Overall, 94 percent of removals and returns were classified within a Priority 1 category, five percent were classified within a Priority 2 category (i.e., serious and repeat misdemeanants, individuals who unlawfully entered the United States on or after January 1, 2014, and significant abusers of the visa system or visa waiver program), and one percent were classified within a Priority 3 category (individuals issued a final order of removal on or after January 1, 2014).

But not only are the administration’s overall “deportation” numbers highly misleading, they also mask the fact that interior arrests are dropping. According to ICE data analyzed by the Center for Immigration Studies last summer, there are about 925,000 illegal aliens who’ve received a final order of removal from an immigration judge still living in the United States, including about 179,000 convicted criminals. But despite these alarming numbers, the administration’s recent report states that ICE made nearly 11,000 fewer interior arrests in FY2016 than the year before, down from 125,211 in FY2015 to 114,434 last year.

Even assuming that every alien arrested by ICE in 2016 was under a final order of removal, this would mean ICE only arrested 12 percent of the total number of legally removable aliens, and only deported about seven percent.

Additionally, based on conservative immigration estimates, these 65,000 aliens only account for about .6 percent of the estimated 11 million unlawfully present aliens living in the United States.

http://www.mrctv.org/blog/ice-deported-less-1-percent-all-illegal-aliens-fy2016

What is a Sanctuary City? It’s Not What They’ve Been Telling You

Texas governor vows sanctuary cities will not be tolerated

Trump Will END Sanctuary Cities & The Democrats Hate How He’ll Do It

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Circling The Drain –The Blaze and Glenn Beck? — A Crash Course — The Inescapable Consequences of Personality Disorders — Get Help — If Beck Gets Help, He Will Comeback! — Progressive Liars Are Going Crazy — Videos

Posted on January 4, 2017. Filed under: American History, Articles, Blogroll, Books, College, Communications, Constitution, Culture, Documentary, Economics, Education, Employment, Family, Fiscal Policy, Freedom, Government Land Ownership, government spending, history, Illegal, Immigration, Inflation, IRS, Law, Legal, liberty, Life, Links, Literacy, Money, Non-Fiction, People, Philosophy, Photos, Political Correctness, Politics, Press, Programming, Psychology, Radio, Religious, Speech, Strategy, Taxation, Taxes, Unemployment, Video, War, Wisdom, Work, World War II, Writing | Tags: , , , , , , , , , , , , , , , , , , |

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Charlie Rose interviews Glen Beck about the 2016 Presidential Campaign

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TO OVERCOME DEPRESSION | ANXIETY | HARD TIMES – Very Motivational

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GLENN BECK’S THEBLAZE MAY FINALLY BE BURNING OUT

Glenn Beck’s Mental Disorder

Posted on March 2, 2016 by Robert Ringer

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I’ve written about Glenn Beck’s painful demise many times over the years, even giving my readers an early heads-up that his days at Fox News were numbered. “Hell hath no fury like a woman scorned,” wrote 16th century playwright William Congreve. And he was right, because when it comes to Beck, I feel like a scorned woman. I really loved the guy in his early days at Fox, then suddenly he turned on me, along with the rest of his viewers.

In his first year at FNC, I was awed by Beck’s raw talent and no-holds-barred disrobement of the radical left. The fact that he was the most hated man in America was de facto proof that he was a fearless truth-teller, because the people of the lie — those millions of chronically dishonest folks in both the radical-left and conservative-establishment wings of the Demopublican Party — harbor venomous contempt for anyone who dares to expose their lies.

But after Beck’s first year at Fox, it was all downhill. The first time the thought crossed my mind that perhaps he wasn’t authentic was when he held a rally in Washington D.C. and a half million people showed up. I was there, and I can honestly say that I didn’t know what the point of the rally was, but the half million people in attendance were clearly mesmerized.

It wasn’t until much later I realized that the only purpose of the D.C. event was to provide a forum for Beck’s followers to assure him how much they loved him. Really, there was absolutely no agenda other than “We love Glenn Beck!”

Once that chink in Beck’s armor was exposed, the second chink came when he started restricting the guests on his show to clergymen and no-name religious scholars like David Barton, whom he stunningly, and often, referred to as “the most important man in America.” It was such a ludicrous statement that it made me wonder if Beck was once again getting cozy with Jack Daniels.

But it got even worse when, in his dwindling days at Fox, Beck sat on the edge of his desk for the entire hour of each show and gave what appeared to be an extemporaneous monologue. I was amazed at his ability to talk for an hour without notes, but, even so, it became very boring after a week or two. Increasingly, he appeared to be a beleaguered and lost soul.

Finally, as I had predicted to my readers, Beck parted ways with Fox News and started a new media company that he said would make his enemies wish he were back at Fox where he was on the air only an hour a day. Unfortunately for him, it hasn’t worked out quite that way.

As Beck began to realize he had become yesterday’s news, he started popping up on “The O’Reilly Factor” and “The Kelly File.” His slobbering all over Bill O’Reilly and Megyn Kelly was difficult to watch. (Fortunately, I no longer watch Malevolent Megyn at all.)

Beck’s attempts at getting attention are nothing short of embarrassing. When he was still at Fox, he somberly announced that his doctor had told him he was on the verge of possibly losing his eyesight. It’s nice to know that that didn’t happen. Then, after he left Fox, he supposedly had a mysterious, life-ending illness, but that apparently disappeared as well.

Finally, there was what he described as “the most deadly decision of [my] career” — announcing that, in a show of compassion, he was going to send truckloads of food and supplies to the Central American refugee kids who flooded the southern border of the U.S. in 2014.

Beck’s personality reminds me of Jim Jones of Jonestown fame. Perhaps becoming a cult leader is his ultimate destiny, because he desperately needs people to follow him, listen to him, and adore him. He is a man in search of true believers who will follow him to the ends of the earth.

On to the next chapter: Just when Beck was almost out of ideas on how to get attention and regain his stardom, along came an unlikely new politician by the name of Donald Trump. It was almost too good to be true. Beck saw what he thought was a golden opportunity to make himself into a hero by focusing his attention on bashing the media’s newest version of the Antichrist.

It’s now become his fulltime job. He demonizes Trump all day, every day, and has literally pleaded with his audiences to vote for anyone but The Donald. He even joined an angry bunch of establishment losers (people for whom he had always expressed considerable contempt) by signing on to the National Review’sdesperation piece to stop Trump.

As one would expect, he has repeatedly warned his listeners and readers that Trump’s rise to power parallels that of Adolf Hitler’s. And speaking of Hitler, in a recent article on his blog, Beck even said that he would vote for Hitlary Clinton if it came down to her or Trump. He then took it over the edge by saying, “I’m warning you now, you will say after two years of Donald Trump, ‘I’d give my right arm for Barack Obama.’”

In truth, of course, Beck’s mental disorder has nothing to do with Donald Trump and everything to do with his psychopathic need for attention. The only other theory I can come up with is that he is — as childish as it may seem — insanely jealous of Trump for all the attention he’s been getting.

It probably brings back painful memories of his own glory days in the spotlight — before those nasty mental demons gained control of his mind. It appears Beck is trying to piggyback onto Trump’s fame in an effort to get noticed. Unfortunately, it’s not working, and he’s only succeeding in making himself look ever more pathetic.

I would hate to see anything bad happen to this once-great talent, but I truly believe that if those closest to Glenn Beck don’t get him some serious psychiatric help soon (Where is Keith Ablow when you need him?), he could end up as a face-in-the-gutter alcoholic once again — or, worse, he might even do harm to himself or others.

Having said all this, in fairness, Glenn Beck isn’t alone when it comes to Trump Derangement Syndrome. The fact is that his views are shared by millions of Trump haters throughout the world.

Putting Beck’s mental issues aside for a moment, the Trump phenomenon is not all that complicated. Thanks to the radical left — and the establishment right that carries the left’s water — people’s anger over their loss of freedom and the intentional destruction of their country has reached the pitchfork stage.

Even so, the D.C. Crime Syndicate remains in denial, and its members are hysterical at the thought that they are in the process of losing their stranglehold — not just over Washington, but over all of America as well. They see Trump as a threat to both their power and their monopoly on legalized theft.

But the truth be known, Trump haters like Beck give Trump far too much credit. There’s no question he’s a narcissist. There’s no question he’s an egomaniac. There’s no question he’s rude, crude, and nasty. No one disputes any of these unflattering Trump qualities.

What Trump haters don’t get, however, is that these are the very qualities that millions of people actually want in a new president, so he can take down the Washington establishment. The best way to think of Trump is as a wrecking ball that has a good chance of destroying the D.C. Crime Syndicate.

Simply put, the Trump phenomenon is nothing more than long-overdue blowbackfrom everyday Americans yet, amazingly, the delusional establishment still has no clue. What Trump actually does if he becomes president is almost secondary to those who support him. Right now, people just want the Washington power structure dismantled, and they figure that once that’s accomplished, they can sort things out later if Trump’s less than endearing qualities prove to be a problem.

In the meantime, in the event you’ve never read Glenn’s Beck’s The Blaze on the Internet, you should do so for a couple of days. His obsession over DT will take your breath away. I tell you, the man has a serious mental disorder, and I mean that literally. Sad … very, very sad.

https://robertringer.com/glenn-becks-mental-disorder/

Glenn Beck’s Blaze Circling The Drain

Published on Oct 5, 2016

Glenn Beck isn’t great at business or money management. Word on the street is The Blaze is about dead. They could really use a random billionaire bailout right about now. Cenk Uygur and John Iadarola, hosts of The Young Turks, break it down. Tell us what you think in the comment section below. http://tytnetwork.com/join

“Sources inside Glenn Beck’s once-mighty multimedia production company say that Beck is falling apart as his media empire collapses around him.

An employee of Beck’s flagship website TheBlaze.com told Huffington Post in an article published Wednesday that the few remaining staff are “looking for an exit” because they expect the site to be shuttered soon for good.

Huffington Post’s Michelle Fields said that TheBlaze.com is “suffering from a lack of editorial direction, staff attrition and internal discord” and that the mood among employees is “somber” as they’ve watched a 25-member editorial team get whittled down to six people — with more cuts expected.

“The few people who are still left are looking for an exit because they know The Blaze is over,” the source told Fields. “They haven’t told us straight up that they’re done with us, but all the signs point to it, and they’re not replacing people who are laid off or get out.”
Other employees report that their healthcare benefits were reduced over the summer and that in September, all of their travel and phone stipends were cut off. In June, the company closed its vast New York City newsroom and the remaining employees are working from home.”*

Read more here: https://www.rawstory.com/2016/10/the-…

[youtube-https://www.youtube.com/watch?v=eQS_mYXof8s]

Glenn Beck Rips Into Ted Cruz For Endorsing Trump

Glenn Beck Goes Bananas After Ted Cruz Endorses Trump

Glenn Beck’s ‘The Blaze’ Is Burning Down

Published on Aug 1, 2016

The Blaze is in a lot of trouble. Cenk Uygur, host of The Young Turks, breaks it down. Tell us what you think in the comment section below.

“Conservative television and radio host Glenn Beck has filed a lawsuit in Texas against the man who used to run his entertainment and news network, TheBlaze, according to sources close to Mr. Beck. The petition, obtained by LawNewz.com, was filed on behalf of Mercury Radio Arts, which serves as Beck’s production and operating company over TheBlaze. The complaint accuses Chris Balfe of breach of contract, general mismanagement, breach of fiduciary duty, and fraud. Balfe served as the COO of Mercury Radio Arts and was CEO of TheBlaze until he left in December 2014 to start his own company, Red Seat Ventures. Balfe had worked for Beck for more than 10 years, and was credited with helping to grow Beck’s business.

“I am embarrassed and saddened it has come to this. It is an ongoing legal matter so you will not hear me speak of this often but as always, I want you to hear it from me,” Beck wrote on his website on Monday.

Beck’s lawsuit comes amid reports of internal financial turmoil at TheBlaze. The complaint alleges between 2009 and 2014, Balfe’s compensation totaled in excess of $13 million.”

Read more here: http://lawnewz.com/high-profile/exclu…

THE FALL OF GLENN BECK!

Glenn Beck: ‘I Think People Think That I’m … Nuts’

Glenn Beck’s Secret Brain Trouble, How He ‘Fixed’ It Is Most Troubling Of All

How Glenn Beck Overcame His Serious Health Issues: “It Was A Miracle”

Glenn Beck Describes His Pivot Point, And The Support of His Wife

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“Up/Down” Bipolar Disorder Documentary FULL MOVIE (2011)

Tomi Lahren | Final Thoughts 11/28/16

Aerosmith – Crazy

Paul Simon – Still Crazy After All These Years

Lyrics

I met my old lover
On the street last night
She seemed so glad to see me
I just smiled
And we talked about some old times
And we drank ourselves some beers
Still crazy after all these years
Oh Still crazy after all these years

I’m not the kind of man
Who tends to socialize
I seem to lean on
Old familiar ways
And I ain’t no fool for love songs
That whisper in my ears
Still crazy after all these years
Oh still crazy after all these years

Four in the morning
Crapped out
Yawning
Longing my life away
I’ll never worry
Why should I?
It’s all gonna fade

Now I sit by my window
And I watch the cars
I fear I’ll do some damage
One fine day
But I would not be convicted
By a jury of my peers
Still crazy after all these years
Oh still crazy
Still crazy
Still crazy after all these years

Report: Glenn Beck’s The Blaze ‘Falling Apart’

The Huffington Post reportson the continuing problems engulfing The Blaze founder Glenn Beck’s troubled media empire.

From The Huffington Post:

Glenn Beck’s website The Blaze is coming apart, suffering from a lack of editorial direction, staff attrition and internal discord, according to sources inside the news outlet.

The site, which Beck launched in 2010 to serve as the conservative counterpart to The Huffington Post, has dropped from 25 employees on its editorial side to just six. A source inside The Blaze, who requested anonymity for fear of retribution, told HuffPost that the mood among the rapidly diminishing news team is somber.

“The few people who are still left are looking for an exit because they know The Blaze is over,” the source said. “They haven’t told us straight up that they’re done with us, but all the signs point to it, and they’re not replacing people who are laid off or get out.”

Read the rest here.

http://www.breitbart.com/big-journalism/2016/10/13/report-glenn-becks-blaze-falling-apart/

VIA THE BLAZE

BAD BLOOD

Blazingly Mad Glenn Beck Sues His Fired CEO Christopher Balfe

The suit—in which Beck’s privately held company, Mercury Radio Arts, is the plaintiff and seeks a jury trial—alleges fraud, breach of contract, dereliction of duty, and various other misdeeds.

Lloyd Grove

LLOYD GROVE

08.01.16 5:45 PM ET

In what one former associate of Glenn Beck described as “the last gasp of a dying empire,” the volatile right-wing radio, streaming video, and cable television personality is suing his longtime former chief executive, Christopher Balfe, whom Beck fired in December 2014.

The suit—in which Beck’s privately held company, Mercury Radio Arts, is the plaintiff and seeks a jury trial—alleges fraud, breach of contract, dereliction of duty, and various other misdeeds.

“I feel terrible for Glenn and I hope he finds the help that he needs,” Balfe, who worked closely with Beck for nearly two decades before their split, said Monday in a statement to The Daily Beast.

“The lawsuit speaks for itself,” said a spokesman for Beck—the only comment provided.

Beck, meanwhile, told listeners and viewers Monday of his syndicated radio program, which is video-streamed on his paid-subscription site TheBlaze.com: “I am—[Beck’s wife] Tania and I—are both really saddened by this and saddened that it has come to this.”

The 16-page complaint was filed quietly Friday in Dallas County, Texas, District Court, and apparently leaked Sunday night as an “exclusive” to the Lawnewz.com website, with another account splashed on GlennBeck.com.

“There are articles that have come out today on apparently lawsuit websites. I’m not going to give them publicity,” Beck told his fans. “And you’ll see more articles, I would assume, over the next few days. It’s an ongoing legal matter. And you’re not going to hear me talking much about it.”

Then, despite his insistence on not giving publicity to stories about the lawsuit, Beck recited the web addresses of the articles in question.

He is, of course, well known for changing his mind—campaigning hard during the Republican primaries for former presidential candidate Ted Cruz, for instance, mere months after announcing with spectacular fanfare that he was leaving politics for good.

Beck’s lawsuit is sharply at odds with previous expressions of gratitude he made three months after Balfe, along with fellow ex-Beck executive Joel Cheatwood, left Mercury Radio Arts, where Balfe was chief operating officer, and its subsidiary The Blaze, where Balfe was CEO.

“Chris and Joel helped me build one of the industry’s first truly independent multi-media companies,” Beck declared in March 2015, after Balfe and Cheatwood, who had steered Beck’s cable television career at HLN and Fox News, announced their formation of a new digital media company, Red Seat Ventures, and took several more top Beck executives with them. “I am sad to see them go but they left our company with an incredible foundation.”

Balfe retained minority ownership in The Blaze after he left, according to the lawsuit, and two sources familiar with the arrangement told The Daily Beast that his deferred compensation agreement featured monthly payments to satisfy around a million dollars that Balfe is owed under the agreement for both his ownership stake and his pro-rated share of company revenues.

But in recent weeks, say these sources, The Blaze has experienced cash-flow problems and has been having trouble paying vendors, while the website’s online traffic has plunged from around 26 million monthly global unique visitors in January 2015, the month after Balfe was dismissed, to around 10 million currently, according to the measuring service Quantcast.

Several more key executives have departed in the past year, along with Beck’s longtime television agent, George Hiltzik, as well George’s son Matthew Hiltzik, who recently resigned as the outside publicist for Beck and his companies; New York PR maven Davidson Goldin now has that account.

In another blow to The Blaze’s financial stability, the cable television distributor Cablevision recently stopped carrying Beck’s programming—representing an annual loss to The Blaze estimated at more than $2 million in subscriber fees and advertising sales, according to the sources.

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These sources described Beck’s lawsuit as a pre-emptive strike.

They said that in June, after failing to receive his regular check, Balfe notified Beck’s company that if he wasn’t paid quickly, he would be exploring his options to obtain the money due him.

This none-too-veiled threat prompted Beck to file his own lawsuit claiming, instead, that Balfe actually owes him money—a portion of the $13 million Beck claims Balfe was paid as an executive between 2009 and 2014.

“This is a shockingly excessive amount that far exceeds appropriate compensation for companies of Mercury and TheBlaze’s size and financial performance,” the lawsuit contends.

But back in March of last year, when Balfe and Cheatwood were launching Red Seat Ventures, the 52-year-old Beck gushed: “I am truly grateful that we remain friends and am very excited to see what they do next.”

Their friendship didn’t survive, however, after Beck hired a little-known tech entrepreneur named Jonathan Schreiber, a diehard “superfan” of Beck’s syndicated radio program, who arrived in September 2014 from Israel via Miami, networked his way into Beck’s inner circle, gained the boss’s confidence and began accumulating power in the operations of both Mercury Radio Arts and The Blaze.

According to company employees, as The Daily Beast reported last February, Beck seemed to have become infatuated with Schreiber, who first showed up at The Blaze’s now-defunct Manhattan studios, and later had been regularly spotted in Beck’s expansive, glass-walled office at the rambling company headquarters in the Dallas suburb of Las Colinas—sometimes hugging his idol after a heart-to-heart.

Schreiber’s Orthodox Judaism apparently was in sync with Beck’s ardent religiosity as a Mormon convert, although staffers said Schreiber—who became president of Beck’s parent company—had an off-putting, arrogant manner with underlings, who gave him the nickname “Voldemort.”

Back in February, as Beck increasingly complained about Balfe and others who had helped orchestrate his career, Schreiber defended his own leadership to The Daily Beast.

“Glenn Beck, brilliant media mogul, realized he was unhappy in the direction his company was going so he brought in new blood,” he said in an email. “The goal being to put the company in the right direction. Through that process we separated with many people. Some will be missed, some less so.”

He added: “I am very proud of my work here, I am very proud of the culture we have created AND PROUD OF [his capital letters] the people WE have been able to bring in to the fold… No one likes to admit that they are not here because of themselves, it must be Voldemort.”

http://www.thedailybeast.com/articles/2016/08/01/blazingly-mad-glenn-beck-sues-his-fired-ceo-christopher-balfe.html

Glenn Beck’s Farewell Address to His 40 Laid-Off Troops… from His Pretend Oval Office

 

In a special video posted to his website today, Glenn Beck addressed news reports of the latest mass layoffs at his troubled media empire.

According to a report yesterday in the Daily Beast, Beck laid off 40 employees of his Blaze media organization “in order to satisfy the requirements of a multimillion-dollar bank loan taken out recently to keep Beck’s revenue-challenged enterprise running.”

As the Daily Beast noted, “This latest round of mass firings comes as no surprise to insiders at The Blaze and Mercury Radio Arts, which laid off dozens of employees last May on a day referred to internally as ‘Black Monday,’ around the same time that Beck was purchasing a private jetliner and a $200,000 Maybach sedan.”

In the video released today, Beck is seen seated at a replica of the Resolute desk in his mock Oval Office set delivering the opening monologue of his radio show.

Below is the transcript of his remarks.

***

I wanted to start there today because there’s a story that maybe you have read that came out yesterday that is talking about how yesterday my company, TheBlaze, laid off 40 people. And my media empire is crumbling. And part of it is because I’m traveling around with Ted Cruz.

Well, I want you to know, yes, I’ve lost a lot of money traveling around with Ted Cruz. I’ve lost about half a million dollars. That’s my choice. I believe in something.

Did that cause the 40 people to lose their job? No.

I want to talk to you today because we’re in a community together, and I trust you. And I tried to be trustworthy. And when I make a mistake, I own up to it. And I’m a trusting guy.

I think anybody on the show will tell you my biggest problem is I trust everybody, until they prove otherwise. And I try to live my life in a transparent way. And I try to surround myself with others that I believe are trustworthy.

And then I went on to build my own company with an authentic voice, a trustworthy company. And one of my main principles — and you heard me saying Isaiah it a million times: We take on no debt. Root ourselves in principles and people. Live within our own means.

And I trusted the people that ran my company, that they wanted the same things. And in the beginning, maybe they did want the same things. But a couple of years ago, I realized there were problems in my own company, and that even though the managers were all saying the right things to me, those things were never getting done. And you know this to be true. Because I would talk about things that we were going to do on TheBlaze and everything else, and then they never seemed to materialize. And I was losing credibility with you, but behind the scenes, I was a holy terror for about a year because I couldn’t find out what was going on.

Without saying anything bad about anybody because we just have different principles, the people I had moved down to Dallas and the rest was in New York and Los Angeles and Washington, DC — and we were working now towards being, I guess, a normal, status quo kind of media company, a big media company, and I didn’t ever want that.

But because our team was split from Dallas, Los Angeles — I think we had people at one time in Chicago, Washington, and New York — I didn’t know who really got the vision and who didn’t, who got it and who didn’t.

It was almost two years ago when we had a museum here at the studios in Dallas. And we invited you to come and just see the museum. And I bet there were 10,000 people here that came through — and I loved it. And everybody kept telling me, go home. Go home. Go home. And I wouldn’t go home. None of us did. Nobody on the show went home.

We were there and we spent that whole weekend with you because we love you. We love you.

But I noticed one thing about my company. Not one single person from the management team actually showed up that entire weekend. And I realized, they didn’t love the audience like I did. They weren’t connecting to the message like you did and I did. I’m not sure they were part of the culture of the principles. And I knew I had to get a hold of my company again, and that would mean making really hard choices.

First one was, are you going to stick to your principles? You going to be honest with yourself? Stand for what you believe in, or are you going to give into the status quo and go along to get along? Because these people were my friends, they were my partners, and I don’t know at the time, I thought maybe they were right. But I knew they weren’t in my gut.

And my gut and my spirit said, “Stick by what you know, even if it’s hard and even in the end if you lose.”

I had to start firing people, people that I counted as my friends, best friends, partners. And the process that I began was the hardest process of my life. Yeah, almost as hard as picking myself up off of that carpet when I was facing suicide, that carpet that smelled like soup. But this time I had something I didn’t have before: I had you. I knew you existed. I knew that you believed in the same principles I believe and that we — no, that I had made a promise to you. Our lives, our fortunes, and our sacred honor.

And so I kept going. This has been a really hard five years for me, but the last 18 months have been unbelievable. One thing I had to do was get everyone in my house under one roof so I could look everyone in the eye. Culture matters at a company.

I stopped telling you about the things that were coming on TheBlaze. It’s called the Phoenix project. We’ve been working on it now for about nine months. I haven’t talked to you about it, nor will I until we launch it. I’m tired of telling you the things that I think we’re going to do. I bet you are too. We’re just going to do them. Because I failed you too many times.

The reason the articles like the one that came out yesterday are coming out, part of it is political. Part of it is because Frank Sinatra was right, some people get a kick out of stomping on your dreams. They really do.

Some is, I guess, it’s news when somebody loses their job. Unfortunately, my media company isn’t the only place in America laying people off. My media company is not the only one that’s looking at their balance sheet and saying, “We can’t go into debt, or we’re going to lose all of the jobs.”

They said in this article yesterday — this has been claimed before that my business is failing. I will tell you, two years ago, it was. It was absolutely on fire. Because when I started to go into the books — I was a bad steward. And when I started going into the books and see what had been done to my company that didn’t ever take on debt, I was first told that we were, I think, $4 million in debt. And then it became $7 million in debt. And then when I got the final accounting, 18 months ago, my company that doesn’t take on debt was $13 million in debt.

If I’m going to tell you you shouldn’t have debt, how could I have a company that was $13 million in the hole? I made really hard decisions. And in 18 months, my company that is dying and struggling paid our debt down from 13 million to two.

A couple of months ago, we had a great sponsor of ours, about a 7-million-dollar-a-year sponsor go broke. I feel for that company because everybody that worked for that company, much larger than mine, went out of business. And they left us with a lot of debt.

You see, economies, it’s — it’s like Jenga. One person pulls one big thing out, and the whole thing could fall. But it definitely weakens. And the more pieces of stress or the more pieces that come out of Jenga, the weaker your house becomes. Somebody — Delco goes out of business because GM is no longer making their cars in Ohio, and so that hurts Delco. And then that hurts the grocery store down the street and the restaurants in the town.

We’re in this together. I’m not going to tell you that I’m not running a fail company because the proof is in the pudding. I will just tell you the old managers got us into $13 million of debt. And in less than 18 months, we’ve shaved that off by over $10 million. That doesn’t seem like a failing business. That seems like a business that is thriving and is doing its best to set its principles right.

But I want you to know, when you read TheBlaze, because I’m not happy with it — and I’ve quietly said that recently, over the last year or so. Not happy with it. But it’s changing. We just hired one of the guys who put together American Idol, Oreo cookies. We just hired a guy who was one of the main guys at Good Morning America and CNN. We just hired an HR person from Viacom. I’m rebuilding. And it will be a lot better for me honestly — honestly, it would be a lot better if I would have just filed Chapter 11. But I actually like Harry Truman too much. I don’t believe — Chapter 11, sometimes you have to do. Chapter 7, sometimes you have to do.

But I wanted to pay every single person back because it’s not their fault. It was my fault for not watching what people were doing underneath me.

One last thought and then I’ll move off: When I first put TheBlaze on the air, it was GBTV. And I won a hammer. It’s the Tribeca Disruptive Innovation Award. It’s a disrupter’s award. It goes to some of the best disrupters in the world. I couldn’t believe I was in the room when I won this award. That year, I earned that award because we broke television and we’re the first one to make it an app and put it online.

I haven’t earned this hammer a day since. But I will tell you this: Sometimes it takes a hammer to break what is broken so you can rebuild it. And in today’s world and economy, if you ever get fat and sassy, if you ever start to put profits over people, if you ever decide, “I really don’t need — I really don’t — I don’t care what the people say. Yeah, yeah, they’re customers. They’ll just keep coming.” No, they won’t. You have to innovate every day. You have to actually love your customer every day. You have to actually care about them and wonder, “How can I make their life better or easier?” And when you do that and you understand that by doing that you’re disrupting the entire system and you’ll go places that will scare the living daylights out of you, but you proceed without fear, that’s when you will win.

I’m not going to tell you we’re going to win. I’m just going to tell you, watch us. Watch us over the next year.

http://www.breitbart.com/big-journalism/2016/04/29/glenn-becks-farewell-address-40-laid-off-troops-pretend-oval-office/

PHOTO CHRIS KEANE/REUTERS

Head of Glenn Beck’s Media Empire Quits as The Blaze Burns Down

Kraig Kitchin will stay with the company, but resigned from the top job after friction with fellow Beck executive Jonathan Schreiber. A ‘mass exodus’ of staff may follow.

Lloyd Grove

LLOYD GROVE

01.29.16 5:56 PM ET

In what knowledgeable observers say is a sign of increasing turmoil in Glenn Beck’s troubled media empire, Beck’s longtime mentor and corporate executive, Kraig Kitchin, has quit as CEO of The Blaze.

Kitchin’s replacement, Stewart Padveen, a digital startup entrepreneur who joined Beck’s company last summer, will be the fourth leader of The Blaze since late 2014.

Kitchin, 54, who took over operations of Beck’s conservative-leaning subscription digital and cable television enterprise last June—after two previous CEOs abruptly left in the space of six months—is resigning along with two other senior executives: Jeremy Price, director of advertising sales, and Liz Julis, director of marketing.

Both are based in New York, 1,500 miles removed from corporate headquarters in the Dallas suburb of Irving, Texas.

Several other key employees, including at least two senior producers based in The Blaze’s shrinking New York operation, are expected to follow them out the door.

A source close to the situation predicted a “mass exodus” from the New York studios, which are housed in a largely unoccupied 35,000 square-foot space at Midtown Manhattan’s Bryant Park, previously rented by Yahoo, under a 10-year lease costing Beck’s privately held company an estimated $2 million a year.

Kitchin—who co-founded Premiere Radio Networks three decades ago and has worked with personalities as diverse as Rush Limbaugh, Ryan Seacrest, Whoopi Goldberg, and Beck—tried to put the best face on his resignation in a company-wide email sent out Thursday night.

He described his apparently self-imposed demotion as a result of outside business obligations.

“Our organization—The Blaze—deserves and needs an exclusively focused leader and that’s something I cannot provide, given existing commitments I choose to honor,” Kitchin wrote, adding that “I’m not leaving this company. I’ll stay with The Blaze, working every day as the Interim Head of Sales with a focus on finding the right person for that position, assisting in the transition, on advertiser growth, program development, and industry relations.”

But according to multiple sources, Kitchin’s announcement comes out of frustration after continual friction with top Beck executive Jonathan Schreiber, the recently named president of Beck’s 14-year-old production company, Mercury Radio Arts.

According to multiple sources, Kitchin—who commuted from his home in Los Angeles to Dallas and New York—took the CEO job on an interim basis with the condition that Schreiber would agree not to interfere in The Blaze, an agreement that Kitchin realized was continually being breached. According to people familiar with the situation, Schreiber’s alleged meddling in Kitchin’s operation ultimately became intolerable.

Schreiber didn’t respond to an email from The Daily Beast, and Kitchin declined to comment.

Named president in April 2015 of Mercury Radio Arts—of which The Blaze is a subsidiary, all of it majority-owned by Beck—Schreiber is said to have a penchant for interfering in areas beyond his expertise, namely the staffing and content of The Blaze’s news and opinion site and its television production operation.

The Blaze cable channel reaches an estimated 13 million households which subscribe to DISH, Verizon Fios, and other paid television carriers.

Schreiber’s alleged intrusion is said to have also figured in the departure in June of then-Blaze chief executive Betsy Morgan, an experienced digital media executive who previously ran CBS News’s digital operations, helped grow The Huffington Post, and built TheBlaze.com into a news and aggregation site that—in November 2014—attracted 29 million unique visitors per month.

But by November 2015—according to figures from the Web traffic measuring service Quantcast—monthly traffic for TheBlaze.com had dropped to 16.4 million unique visitors, and traffic for the associated website GlennBeck.com, had plunged from 4.4 million to 1.4 million uniques.

Morgan—ironically, according to sources—had recommended Schreiber to Beck and helped secure his initial position with the company, shouldering a vague responsibility for “strategy and special projects.”

A religious man who practices Orthodox Judaism, Schreiber quickly hit it off with Beck, a devout Mormon convert.

Morgan had replaced Beck’s longtime CEO Chris Balfe, who abruptly exited the company in December 2014, along with fellow exec Joel Cheatwood, as Schreiber was gaining more prominence and influence.

Balfe, who along with Cheatwood retains a minority ownership stake in The Blaze, left after more than a decade of helping Beck build his brand and become a media personality, and was instrumental in the soft launch of The Blaze six years ago while Beck was still hosting his short-lived but wildly popular 5 p.m. program on the Fox News Channel.

Stewart Padveen, Schreiber’s personal friend and “mentor” (as Schreiber describes him in a LinkedIn endorsement), will assume control of The Blaze effective Monday.

Padveen, who lives in Los Angeles, wrote in a staff email that he plans to visit Dallas “next week to kick off this process,” with a later trip planned to New York.

“2015 was a tough year for sure, but thanks to many of you, it was a profitable one,” Padveen wrote concerning this latest corporate shakeup.

“We all owe a debt of gratitude to Kraig for guiding us through some rough times. We still have some history to redress, but if we continue down the path of making solid business decisions, we can get past the past and into the future.”

Besides a period of staff layoffs and turnover that continues to this day, and despite claims of profitability, that “history” apparently includes taking on more debt than the company’s principal owner was comfortable with.

At a staff meeting in New York last February, Beck exhorted his employees to pinch pennies and said the company’s debt was too high at $3 million—a figure sources said later grew to $5 million or more.

“I know much of what has happened since December of 2014, but also much of it has been structural and behind the curtain,” Beck wrote in his own email, in which he thanked Kitchin for his service. “We were a company that was swimming in debt. With the hard work of Kraig, Jonathan, and now Misty [Kawecki, the chief financial officer] we will be debt free by summer. This is miraculous and takes all of the downward pressure off of us.”

Schreiber, a digital startup entrepreneur in his early forties, is a controversial and mysterious figure within Mercury Radio Arts. According to colleagues, he has referred to himself as a “diehard Glenn Beck fan” who, after years of living in Israel, relocated to New York, talked his way into Beck’s confidence, and showed up as a “trusted advisor,” as Beck has called him, in the fall of 2014.

“I want to thank Kraig for everything he has done to help bring the Blaze to the place it is,” Schreiber wrote in his own email, “and welcome Stewart to help bring the Blaze to the places it can go.”

In what a couple of Beck veterans considered ominous corporate-speak, Schreiber added: “All of us, leadership in BOTH companies, have worked together to help ensure that every person will be put into the right role at the right company with clear responsibilities and direction. This will continue to be a process and not an event.”

http://www.thedailybeast.com/articles/2016/01/29/head-of-glenn-beck-s-media-empire-quits-as-the-blaze-burns-down.html

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Master of Disaster President Obama — Legacy of Failure: Domestically and Abroad — One Success: Destroyed Democratic Party! — Videos

Posted on December 30, 2016. Filed under: American History, Articles, Blogroll, British History, Central Intelligence Agency (CIA), College, Communications, Congress, Constitution, Corruption, Crime, Crisis, Dirty Bomb, Documentary, Drones, Economics, Education, Elections, Employment, Energy, European History, Faith, Family, Federal Bureau of Investigation (FBI), Federal Bureau of Investigation (FBI), Federal Government, Federal Government Budget, Fiscal Policy, Foreign Policy, Freedom, Friends, Genocide, government, government spending, history, Homicide, Illegal, Immigration, Islam, Law, Legal, liberty, Life, Links, Macroeconomics, media, Middle East, Monetary Policy, Money, Money, National Security Agency (NSA), National Security Agency (NSA_, Natural Gas, Natural Gas, Newspapers, Nuclear, Nuclear Power, Nuclear Proliferation, Oil, Oil, People, Philosophy, Photos, Politics, Press, Radio, Rants, Raves, Raymond Thomas Pronk, Resources, Security, Strategy, Tax Policy, Taxation, Taxes, Television, Trade Policiy, Video, War, Wealth, Weapons, Welfare, Wisdom, Work, Writing | Tags: |

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Obama unleashes 3,853 regs, 18 for every law, record 97,110 pages of red tape

President Obama‘s lame duck administration poured on thousands more new regulations in 2016 at a rate of 18 for every new law passed, according to a Friday analysis of his team’s expansion of federal authority.

While Congress passed just 211 laws, Obama’s team issued an accompanying 3,852 new federal regulations, some costing billions of dollars.

The 2016 total was the highest annual number of regulations under Obama. Former President Bush issued more in the wake of 9/11.

The proof that it was an overwhelming year for rules and regulations is in the Federal Register, which ended the year Friday by printing a record-setting 97,110 pages, according to the analysis from the Competitive Enterprise Institute.

The annual “Unconstitutional Index” from Clyde Wayne Crews, CEI’s vice president for policy, said that it was much higher under Obama than under former President George W. Bush.

“The multiple did tend to be higher during Obama administration. Bush’s eight years averaged 20, while Obama’s almost-eight have averaged 29,” said his report, first provided to Secrets.

His index is meant to show that it is the federal bureaucracy, not Congress, that levies the most rules. “There’s no pattern to any of this, since the numerators and denominators can vary widely; there had been 114 laws in 2015, and a multiple of 39. The multiple can be higher with fewer laws, or with more regulations, holding the other constant. The point is that agencies do the bulk of lawmaking, no matter the party in power,” he wrote.

President-elect Trump has promised to slash federal regulations, even pledging to cut two current rules for every one he imposes. Congressional leaders have also promised to slash rules and regulations that have escalated under Obama.

http://www.washingtonexaminer.com/obama-unleashes-3853-regs-18-for-every-law-record-97110-pages-of-red-tape/article/2610592#!

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People vs. “Elites”: Nationalist Capitalism Winning — Global Socialism Losing — Videos

Posted on December 29, 2016. Filed under: American History, Articles, Banking, Blogroll, British History, Business, College, Communications, Constitution, Corruption, Crime, Crisis, Documentary, Economics, Education, Elections, Employment, European History, Faith, Family, Federal Government Budget, Fiscal Policy, Foreign Policy, Fraud, Freedom, Friends, Genocide, government, history, History of Economic Thought, Illegal, Immigration, Law, Legal, liberty, Life, Links, Macroeconomics, media, Microeconomics, Middle East, Monetary Policy, Money, Money, People, Philosophy, Politics, Radio, Rants, Raves, Raymond Thomas Pronk, Religious, Speech, Tax Policy, Trade Policiy, Video, War, Wealth, Wisdom, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , |

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Steve Davies and Dave Rubin: Brexit, Classical Liberalism, Libertarianism (Full Interview)

The Difference Between Classical Liberals and Libertarians (Steve Davies Part 2)

Syria, the Middle East, and America’s War on Drugs (Steve Davies Part 3)

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Emergency! Man Behind Brexit Issues Warning For America

Nigel Farage : The Speech That WON Us Our BREXIT – 24 June 2016

Nigel Farage roasts the EU Parliament before & after Brexit

Nigel Farage on Fox News after Brexit

Epic Rant – ‘Nigel Farage Was Right!’

George Carlin – It’s a Big Club and You Ain’t In It! The American Dream

George Carlin – Dumb Americans

The Collapse of The American Dream Explained in Animation

Obama: We Must Guard Against American Nationalism

Trump’s Nationalism Is Destroying Globalism

BREXIT & America First: The Battle of Globalism vs Nationalism

The Most Important Reason Why the European Union Will Surely Fail

Italy Rejects EU Globalism, Defeats Referendum to Give Globalists Limitless Power

Tony Blankley – At Last, an American Nationalist!

Three Big Ideas: Liberalism, Socialism, Nationalism

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07 Nationalism, Imperialism &amp; Globalization the good, the bad and the really, really ugly

What is Classical Liberalism? – Learn Liberty

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Libertarianism 101 with Dr Stephen Davies

The Decline and Triumph of Classical Liberalism (Pt. 1) – Learn Liberty

The Decline and Triumph of Classical Liberalism (Pt. 2) – Learn Liberty

 

Dawn of the New World Order: 2017 will be the year EVERYTHING changes

A NEW World Order is set to emerge next year as huge political changes sweep across Europe including the rise of the mega-alliance under Vladimir Putin and Donald Trump.

Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTY/DSNEW WORLD ORDER: Vladimir Putin and Donald Trump will trigger a revolution across Europe
Putin’s growing power and Trump’s extraordinary US Election victory are both herald’s of a growing movement against the established world governments.Anti-establishment parties raging against the political class could sweep to victory in a swathes of elections next year and change the face of the West.

From Germany, to France, to the Netherlands – fringe and extremist parties are gaining momentum hand over fist and looked primed to seize power.

Notable victories have already been won – with a shocking referendum win in Italy causing Prime Minister Matteo Renzi to resign in a move said to pave the way for the collapse of the EU.

Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUDSEND OF THE EU: Anti-establishment parties are set to sweep to power in Europe

“The new axis between Trump’s America, Putin’s Russia, and European populists represents a toxic mix”

Fredrik Wesslau

Fredrik Wesslau, from the European Council of Foreign Relations, predicted the “unthinkable is now thinkable” after Trump was swept into the White House.

He said the political parties are trying to unseat the “liberal order” in a campaign backed by Putin and Trump.

Politicians look to overthrow the established order are hailing Trump’s election victory as the beginning of the “Patriotic Spring”.

There are six key elections coming up in 2017 which could very easily be won by right-wing parties with nationalist policies which would spell the end of the EU.

Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYGOLDEN DAWN: The Neo-nazi movement in Greece is the most extreme example
Marine Le Pen, leader of France’s National Front, could be poised to take power after the election in May in a move which could pull France out of the EU.
She has described the coming year as a “global revolution” after the election of Trump and the victory of Brexit.Mrs Le Pen has promised to pull france out of NATO and “push migrants who want to come to Europe back into international waters”.The alliance is feared to be a further casualty of the looming political shift – with NATO bosses “preparing for the worst” as they fear Putin will invade Eastern Europe and Trump will pull all US support.
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYMARINE LE PEN: France’s National Front leader could seize power next year
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGEERT WILDERS: The Netherlands’ Party for Freedom leader has compared the Koran to Mein Kampf
Meanwhile, anti-Islam and anti-migrant leader of the Party of Freedom Geert Wilders ended 2016 leading the polls in the Netherlands – contesting the general election in March.He tweeted a picture of Angela Merkel with blood on her hands following the Berlin Christmas market attack – and shared the message “they hate and kill us. An nobody protects us”.He has also compared the Koran to Adolf Hitler’s book Mein Kampf – campaigning to have the Muslim holy book banned – and coined the phrase “patriotic spring”.
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUFRAUKE PETRY: Angela Merkel faces losing Chancellor’s seat next year after major unrest
Frauke Petry is also contesting the German federal election next year as the aftermath of the Berlin attack rocks the government of Angelea Merkel.While she does not have a seat in the Bundestag – the German parliament – approval of her Alternative for Germany party has been swelling in wake of backlash against refugees following terrorist attacks.In her first election manifesto she declared “Islam is not part of Germany” and has previously called on border guard to use “firearms if necessary” when dealing with refugees. 
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYGERMANY: Unrest is sweeping across the European nation after terror attacks
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYBEPE GRILLO: This comedian turned politician has already struck a blow to the EU
Leader of Italy’s Five Star Movement TV comedian Beppe Grillo has already caused a stir as the the Italian government lost a key referendum.Savagedly anti-EU, he has said “political amateurs are conquering the world”, called Trump’s victory an “extraordinary turning point” and his party won two key mayoral seats in Turin and Rome.He has been called the “Italian Donald Trump” and his party could be a key player with elections expected to be held in 2017.
Europe Right Wing Politics Brexit Donald Trump Vladimir Putin New World Order Polls EUGETTYJIMMIE AKESSON: Sweden Democrats’ outspoken leader led a campaign against migrants
The Czech Republic is also set to hold elections in 2017 while Sweden goes to the polls in 2018, both with own Trump-esque leaders who could make a shocking grab for power.Andrej Babis, the second richest man in the Czech Republic, is expected to win the general election for the ANO party and has been reported to have close ties to Putin’s Russia.While in Sweden, anti-immigration Jimmie Akesson of the Sweden Democrats is gaining in popularity – campaigning against his nation’s membership of the EU and advocating a campaign to tell people not to come to Sweden.
With Europe’s biggest economies set to go to the polls, struggling Greece could also follow suit.The extreme right fringes of their politics is dominated by the neo-nazi party Golden Dawn – who have launched attacks on refugee camps.While it is very unlikely they have any chance at power, their nationalist cause is of the most intense and hate-filed in Europe.Centre-right party New Democracy is the most likely to unseat the government should a snap election be called.
The former EU diplomat Wesslau said: “The new axis between Trump’s America, Putin’s Russia, and European populists represents a toxic mix for the liberal order in Europe.”He added: “Within Europe, populists on the left and right are trying to roll back the liberal order.”This insurgency is being actively backed by Putin’s Russia, and, now, it seems, Trump’s America.”The European Union itself risks being an early casualty.”

The Globalists Have Declared War on Nationalists

 

Trump’s populist views of self-determination are sweeping the planet and the elite are in a sheer panic. Only a few weeks ago, the sheep of the planet were being marched to their Armageddon. The dumbed down masses have managed to mount a ninth inning rally that have sent the elite into frenzy.

 

Hillary Clinton Was Supposed to Usher in the New World Order Through the Fall of America

The lies are exposed. Hillary and Bill cannot unring the bill, the truth has been exposed for millions of people to see.

The lies are exposed. Hillary and Bill cannot unring the bill, the truth has been exposed for millions of people to see.

Two months ago, I called upon the Independent Media to step up their attacks on Hillary Clinton’s criminal behavior in a last-ditch and desperate effort to derail her presidential aspirations. After issuing my plea, I can happily report that I got more than I had hoped for. Merely a year ago, I was one of the few voices that was pounding away at Hillary Clinton’s sociopathic behavior. Today, the attacks are so bombastic and vitriolic, that I am joyfully reporting that I feel that my voice is being drowned out by a relentless chorus of voices that has Hillary Clinton in a death grip and they won’t let go. This is a great time for humanity. Even if the criminal elite unleash genocidal hell on Earth, at least humanity will die on their feet. There is absolutely no way that the criminal elite can stem the tide of rebellion against their corrupt and satanically inspired rule over the people.

The criminal elite had pinned their hopes on Hillary Clinton ushering in the NWO by tearing down what was left of American sovereignty. From a Bilderberg, Trilateral and CFR perspective, this woman was sociopathic enough to do what would need to be done to complete this task. However, the criminal elite forgot to do one thing. They neglected to manage her public image. It is leaders like Clinton and Cameron which have awakened the masses, through their abject criminality, and the people are saying enough is enough.

Clinton’s role in the emails, her treason by selling uranium to the Russians to raise money for her foundation, the Benghazi affair, etc., etc, are exploding on the national scene. Former Clinton campaign leaders and Secret Service personnel are speaking out against this despot. The genie will not fit back into the bottle. The elite know this and they are on the verge of a mass nervous breakdown. The playground bully has just been punched in the nose by the 98 pound weakling.

Zbigniew Brzezinski saw this awakening coming in 2011 which prompted him to say the following:

brzezinski kill a million

This is what wounded animals do, they lash out in an uncontrollable manner.

The following op-ed piece written for the Council on Foreign Relations captures the criminal elite’s sense of desperation.

The Face of Global Elite Arrogance

face of pomposity

Meet the face of global pomposity and unbridled arrogance. His disdain for “your type” is noteworthy and speaks to the desperation of global criminal elite.

His name is James Traub and he and his kind are the absolute enemy of every American. He is the heir to the Bloomingdale industries and a prominent member of the Council on Foreign Relations (CFR).

Traub’s elitist views leave nothing to the imagination. Writing for the mouthpiece of The Council on Foreign Relations, he leaves little doubt that the the evil empire is going to strike back.

It is clear that Traub and his fellow CFR elitist snobs are declaring war on any kind self-determination. He expects every Westerner to relish in their servitude to the globalists as he states the following in the article:

  • “the Brexit vote…utter repudiation of….bankers and economists”…
  • “…establishment political parties in major western countries must combine forces to keep out the nationalists”.
  • “…globalization means culture as well as economics: Older people whose familiar world is vanishing beneath a welter of foreign tongues and multicultural celebrations are waving their fists at cosmopolitan elites.”
  • “…(describes) the pro-Trump Republican base as “know nothing” voters…”

In one fell swoop, Traub validated several conspiracy theories, as being conspiracy facts as his statements admit to the following conspiratorial beliefs held by much of the Independent Media:

  • The bankers are involved in a conspiracy that work against the interests of the common man…all wars are bankers’ wars. 
  • The Democrats and the Republicans are “establishment” parties and for all intents and purposes these two parties are two flavors of the same party. 
  • There is an overt admission that illegal immigration is about decultralizing the west. 
  • The “Know-nothing voters” who support Trump should be viewed with extreme disdain (e.g. extremists and domestic terrorists). 

Conclusion

After reading Traub’s article, there is nothing left to the imagination, the elite are in absolute panic. This is what makes the criminal elite so very dangerous. It is my considered opinion that the panicked elite may resort to one of more of the following to reassert control over dumbed down masses, who are awake to the corruption that has ruled over them for so long:

  1. False flag induced martial law, followed by mass incarcerations and genocide.

  2. A complete economic collapse which will pit one useless eater vs. another useless eater. 

  3. Bankers start world wars of epic proportions. World War III could be right around the corner. 

If this is not the future that you want for your children, you best get off of your backside and get involved in the planet-changing conflict.

http://www.thecommonsenseshow.com/2016/06/29/the-globalists-have-declared-war-on-nationalists/

Getty Images
Appeared in: Volume 12, Number 1
Published on: July 10, 2016
NATIONALISM RISING

When and Why Nationalism Beats Globalism

And how moral psychology can help explain and reduce tensions between the two.

Jonathan Haidt is a social psychologist and professor in the Business and Society Program at New York University—Stern School of Business. He is the author of The Righteous Mind: Why Good People are Divided by Politics and Religion.
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Mark K. Updegrove — Indomitable Will: LBJ in the Presidency — Videos

Posted on December 19, 2016. Filed under: American History, Banking, Blogroll, Books, College, Communications, Congress, Constitution, Corruption, Crime, Economics, Education, Elections, Employment, Faith, Family, Farming, Federal Government Budget, Fiscal Policy, Foreign Policy, Freedom, government, government spending, High School, history, Immigration, Language, Law, liberty, Links, Literacy, Macroeconomics, media, Monetary Policy, Money, Money, Newspapers, Non-Fiction, People, Philosophy, Photos, Political Correctness, Politics, Presidential Candidates, Press, Psychology, Radio, Rants, Raves, Strategy, Success, Talk Radio, Tax Policy, Taxation, Taxes, Television, Unemployment, Video, War, Wealth, Welfare, Wisdom, Work, World War II, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , |

Image result for Mark K. Updegrove -- Indomitable Will: LBJ in the PresidencyImage result for lbj and educationImage result for lbj bob kennedyImage result for lbj bob kennedyImage result for lbj on plane from dallas jfkImage result for lbj on plane from dallas jfk

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Image result for lbj and secretary of defense mcnamriaImage result for Mark K. Updegrove -- Indomitable Will: LBJ in the PresidencyImage result for Mark K. Updegrove -- Indomitable Will: LBJ in the PresidencyImage result for lbj and educationImage result for lbj holliing like a dog with grandchildImage result for lbj holliing like a dog with grandchildImage result for lbj and wife at ranchImage result for lbj and wife at ranchImage result for lbj and wife at ranchImage result for lbj holliing like a dog with grandchildImage result for lbj texas white house and wife at ranchImage result for lbj and wife at ranchImage result for lbj and wife at ranchImage result for lbj and wife at ranchImage result for lbj texas white house and wife at ranchImage result for lbj texas white house and wife at ranchImage result for lbj dies funeralImage result for lbj and wife at ranchImage result for lbj and wife at ranchImage result for lbj and wife at ranchImage result for lbj dies funeral burial site tombstoneImage result for lbj texas white house and wife at ranchImage result for Mark K. Updegrove -- Indomitable Will: LBJ in the PresidencyImage result for Mark K. Updegrove -- Indomitable Will: LBJ in the PresidencyImage result for Mark K. Updegrove -- Indomitable Will: LBJ in the Presidency

BookTV: Mark Updegrove, “Indomitable Will: LBJ in the Presidency”

“Indomitable Will: LBJ in the Presidency” — Mark Updegrove

“LBJ” with Mark Updegrove, Rob Reiner & Woody Harrelson

Indomitable Will: LBJ in the Presidency

Published on May 11, 2012

Mark Updegrove, named “one of the country’s best historians” by CNN, is director of the Lyndon Baines Johnson Presidential Library and Museum. He discussed his book, “Indomitable Will,” which provides a portrait of LBJ through the stories and recollections of those who were with him everyday during his presidency. The session was moderated by Terri Garner, director of the William J. Clinton Presidential Library.

This footage has been provided by the Clinton School of Public Service. The Clinton School of Public Service is the only school in the nation to offer a Master’s Degree in public service. It is located on the grounds of the William J. Clinton Presidential Library. The Clinton School’s Distinguished Lecture Series are speakers whom speak at the Clinton School, and can be attended by the general public through reserving a seat. More about the Clinton School of Public Service can be found at the link below;

An Intimate View of the Indomitable LBJ

LBJ: The 36th President of the United States

36 Lyndon Johnson

PBS LBJ Part 1

Presidency of LBJ

LBJ Documentary “The Great Society”

LBJ: From Senate Majority Leader to President, 1958-1964

How LBJ Mastered the Senate: The Most Riveting Political Biography of Our Time (2002)

The Most Riveting Political Biography of Our Time: The Definitive Portrait of LBJ (2002)

How Did LBJ Make His Money? The Disturbing Story of His Political Rise and Corruption (1990)

The Open Mind: The Years of Lyndon Johnson: The Passage of Power, Part 1 of 3.

The Open Mind: The Years of Lyndon Johnson: The Passage of Power, Part 2 of 3.

The Open Mind: The Years of Lyndon Johnson: The Passage of Power, Part 3 of 3.

The Open Mind: Lyndon Johnson – ‘Master of the Senate’

The Open Mind: Lyndon Johnson – ‘Master of the Senate’ Part 2

The Open Mind: On History, Biography, Literature… and Robert Caro, Part 1 of 2

The Open Mind: On History, Biography, Literature… and Robert Caro, Part 2 of 2

How to Write a Great Biography: Authors Explain the Secrets to Success (1999)

Q&A: Robert Caro – Part 1

Published on May 7, 2012

Pulitzer prize winning author and historian Robert Caro discusses his newly released biography of Lyndon Johnson entitled “The Years of Lyndon Johnson: The Passage of Power.” This is his fourth book in the Johnson biographical series and Caro promises a fifth and final book in the future. The period covered in the book is from 1958 until early 1964.

Q&A: Robert Caro – Part 2

Robert Caro: Understanding Power (Full Length Version)

The Art of Political Power, with Robert Caro and William Hague

LBJ Versus The Kennedy’s: Chasing Demons

Death of LBJ as it broke

Indomitable Will

From Wikipedia, the free encyclopedia
Indomitable Will: LBJ in the Presidency
Indomitable Will - LBJ in the Presidency.jpg
Author Mark K. Updegrove
Country United States
Language English
Publisher Crown Publishing Group
Publication date
March 13, 2012
Media type Hardcover
Pages 400

Indomitable Will: LBJ in the Presidency is a biography of Lyndon Baines Johnson by Mark K. Updegrove, published in 2012.

Plot summary

Indomitable Will is a compilation of original interviews, personal accounts and recollections of individuals who knew, worked with and for President Lyndon Johnson during his five years as President of the United States. Sources include the Reverend Billy Graham, Carl Bernstein, Liz Carpenter, George H. W. Bush, Walter Mondale, Harry Middleton, Rose Kennedy, Gerald R. Ford, Helen Thomas, Ted Kennedy, and Bill Moyers, who served as White House Press Secretary in the Johnson Administration.[1]

The book focuses on the extensive legislation passed during Johnson’s Presidency and includes photographs, transcripts from his telephone conversations, and previously unpublished documents.[2][3]

The author is a Presidential historian who has written two additional non-fiction works based on the lives of American Presidents: Baptism by Fire: Eight Presidents Who Took Office in Times of Crisis (2009), and Second Acts: Presidential Lives and Legacies After the White House (2006).[4]

References

  1. Jump up^ Hendricks, David. “Express-News business writer and columnist”. MySanAntonio. Retrieved 5 June 2012.
  2. Jump up^ Langan, Michael. “News Book Reviewer”. Buffalo News. Retrieved 5 June 2012.
  3. Jump up^ Monaco, Frances. “Reviewer”. The Post and Courier. Retrieved 5 June 2012.
  4. Jump up^ “The U.S. National Archives and Records Administration”. The U.S. National Archives and Records Administration. Retrieved 5 June 2012.

External links

https://en.wikipedia.org/wiki/Indomitable_Will

Mark K. Updegrove[1] (born August 25, 1961) is an American author, historian, journalist, television commentator, and director of the Lyndon Baines Johnson Library and Museum in Austin, Texas.

Early life and education

Updegrove was born outside Philadelphia in Abington, PA, on Aug. 25, 1961. He attended high school in Newtown, PA, at the George School, which honored him with its Distinguished Alumnus Award in 2015.[2] He attended Guilford College in Greensboro, NC, and graduated from the University of Maryland, College Park, with a Bachelor of Arts in economics in 1984.

Career

Magazine Publishing

Updegrove spent much of his early career in magazine publishing, including serving as manager of Time Magazine in Los Angeles; president of Time Canada, Time’s separate Canadian edition and operation; and, publisher of Newsweek.

Lyndon Baines Johnson Library and Museum

Since October 2009, Updegrove has served as the fourth director of the Lyndon Baines Johnson Presidential Library in Austin, Texas.

Former U.S. Secretary of State Henry Kissinger and Mark Updegrove at The Vietnam War Summit at the LBJ Presidential Library in 2016. Photo by Jay Godwin.

Under Updegrove’s direction, the library partnered with the Aspen Institute on Medicare and Medicaid Turn 50, in Washington, D.C, in April 2015, and in November 2015, partnered with WETA-TV, on In Performance at the White House: A Celebration of American Creativity, which aired on PBS, to mark the 50th anniversary of the creation of the National Endowment for the Arts and the National Endowment for the Humanities.

Early in his tenure at the library, Updegrove oversaw the $11 million renovation of the library’s core exhibits on Lyndon Johnson and his administration, which opened in December 2012.[3][4]

Updegrove’s December 2014 Politico article, What ‘Selma’ Gets Wrong,[5] ignited a controversy over the portrayal of Lyndon Johnson as an obstructionist on voting rights in the film Selma, touching off a debate about the importance of accuracy in films based on historic events. In January 2015, Updegrove addressed the issue on CBS’ Face the Nation.[6]

Adjunct Professor/Lecturer

In 2013 and 2015, Updegrove taught The Johnson Years for Liberal Arts Honors students as an adjunct professor at The University of Texas at Austin. He has spoken extensively at numerous colleges and universities, museums, presidential libraries, and other public speaking forums.

Selected publications

Books

  • Destiny of Democracy: The Civil Rights Summit at the LBJ Presidential Library (University of Texas Press, 2015)
  • Indomitable Will: LBJ in the Presidency (Crown Publishers, 2012)[7]
  • Baptism By Fire: Eight Presidents Who Took Office During Times of Crisis (St. Martins Press, 2009)[8]
  • Second Acts: Presidential Lives and Legacies After the White House (Lyons Press, 2006)[9]

References

  1. Jump up^ Staff, Public Affairs. “Mark Updegrove Named New Director of LBJ Library”. The U.S. National Archives and Records Administration. The U.S. National Archives and Records Administration. Retrieved 9 April 2012.
  2. Jump up^ “Alumni Award Recipient 2015 – George School”. Retrieved 2016-08-15.
  3. Jump up^ Shannon, Kelley. “LBJ library in Austin to unveil $10 million update Dec. 22”. The Dallas Morning News. Retrieved 24 January 2013.
  4. Jump up^ Baskas, Harriet. “Oval Office audio tapes highlight redesigned LBJ Presidential Library”. NBC News. Retrieved 24 January 2013.
  5. Jump up^ “What ‘Selma’ Gets Wrong”. Politico. Retrieved 13 May 2015.
  6. Jump up^ “Does the film “Selma” portray LBJ unfairly?”. Face the Nation. Retrieved 15 August 2016.
  7. Jump up^ Ealy, Charles. “‘Indomitable Will’ seeks to give LBJ due credit”. statesman.com. Retrieved 14 April 2012.
  8. Jump up^ Heilbrunn, Jacob. “Crisis Management”. The New York Times Company. Retrieved 16 January 2009.
  9. Jump up^ “Second Acts: Presidential Lives and Legacies After the White House”. Publishers Weekly. Retrieved 6 June 2006. |first1= missing |last1= in Authors list (help)

External links

https://en.wikipedia.org/wiki/Mark_K._Updegrove

 

The Years of Lyndon Johnson

From Wikipedia, the free encyclopedia
  (Redirected from The Passage of Power)

The Years of Lyndon Johnson is a biography of Lyndon B. Johnson by the American writer Robert Caro. Four volumes have been published, running to more than 3,000 pages in total, detailing Johnson’s early life, education, and political career. A fifth volume will deal with the bulk of Johnson’s presidency. The series is published by Alfred A. Knopf.

Book One: The Path to Power (1982)

In the first volume, The Path to Power, Caro retraced Johnson’s early life growing up in the Texas Hill Country and Washington, D.C.. (Caro moved to these areas for months to interview numerous people who knew Johnson and his family.) This volume covers Johnson’s life through his failed 1941 campaign for the United States Senate. This book was released on November 12, 1982. It won the 1982 National Book Critics Circle Award. It was a finalist for the 1983 National Book Award, hardcover autobiography or biography.[1]

Book Two: Means of Ascent (1990)

In the second volume, Means of Ascent, Caro detailed Johnson’s life from the aftermath of Johnson’s first bid to his election to the U.S. Senate in 1948. Much of the book deals with Johnson’s bitterly contested Democratic primary against Coke R. Stevenson in that year. The book was released on March 7, 1990.

Book Three: Master of the Senate (2002)

In the third volume, Master of the Senate, Caro chronicles Johnson’s rapid ascent in United States Congress, including his tenure as Senate majority leader. This 1,167-page work examines in particular Johnson’s battle to pass a landmark civil rights bill through Congress without it tearing apart his party, whose southern bloc was anti-civil rights with the northern faction more supportive of civil rights. Although its scope was limited, the ensuing Civil Rights Act of 1957 was the first such legislation since the Reconstruction era. The book was released on April 23, 2002. It won the 2003 Pulitzer Prize for Biography or Autobiography, the 2002 National Book Award for Nonfiction,[2] the 2002 Los Angeles Times Book Prize for Biography, and the 2002 D.B. Hardeman Prize.[3]

Book Four: The Passage of Power (2012)

In the fourth volume, The Passage of Power, Caro covers Johnson’s life from 1958 to 1964, the challenges Johnson faced upon his assumption of the presidency, and the significant accomplishments in the months after Kennedy’s assassination.[4] The 736-page book was released on May 1, 2012. It won the National Book Critics Circle Award (2012; Biography),[5] the Los Angeles Times Book Prize (2012; Biography),[6] the Mark Lynton History Prize (2013), the American History Book Prize (2013)[7] and the Biographers International Organization‘s Plutarch Award (2013).[8] It was a finalist for the National Book Award for Nonfiction (2012).[9] It was selected as one of Time magazine’s Best Books of the Year (non-fiction #2).

Book five

In November 2011, Caro estimated that the fifth and final volume would require another two to three years to write.[10] In March 2013, he affirmed a commitment to completing the series with a fifth volume.[11] As of April 2014, he was continuing to research the book.[12]

Themes of the series

Throughout the biography, Caro examines the acquisition and use of political power in American democracy, from the perspective both of those who wield it and those who are at its mercy. In an interview with Kurt Vonnegut and Daniel Stern, he once said: “I was never interested in writing biography just to show the life of a great man,” saying he wanted instead “to use biography as a means of illuminating the times and the great forces that shape the times—particularly political power.”[13]

Caro’s books portray Johnson as alternating between scheming opportunist and visionary progressive. Caro argues, for example, that Johnson’s victory in the 1948 runoff for the Democratic nomination for the U.S. Senate was achieved through extensive fraud and ballot stuffing, just as Johnson had lost his 1941 senate race because his opponent stuffed the ballot boxes more than Johnson. Caro also highlights some of Johnson’s campaign contributions, such as those from the Texas construction firm Brown & Root; in 1962 the company was acquired by another Texas firm, Halliburton, which became a major contractor in the Vietnam War. Despite these criticisms, Caro’s portrayal of Johnson also notes his struggles on behalf of progressive causes such as the Voting Rights Act of 1965.

Influence of the series

Politicians in particular have responded most strongly to The Years of Lyndon Johnson:

  • Tom Daschle, a former Senate majority leader, once told the newspaper Roll Call after reading Master of the Senate that “I think the thing you learn from reading that magnificent book is that every day, this body makes history.”
  • Walter Mondale, a former US vice president, described Master of the Senate as a “superb work of history.”
  • Gordon Brown, a former British prime minister, said of the series: “It’s a wonderfully written set of books. The stories are quite breathtaking … These books challenge the view of history that politics is just about individual maneuvering. It’s about ideas and principled policy achievements. That’s what makes it one of the great political biographies.”[14]
  • William Hague, a former British Conservative Party leader and foreign secretary, nominated Means of Ascent as the book he would most like to have with him on a desert island, in the BBC Radio 4 program Desert Island Discs. He later wrote: “I explained that it was the best political biography of any kind, that I had ever read. I said it conveyed more brilliantly than any other publication what it really feels like to be a politician … When a fourth volume finally completes the set, this will be nothing short of a magnificent history of 20th century America.”[14]
  • Michael Howard, another former Conservative Party leader, encountered the series after swapping houses with Caro for a holiday. He said, “For Caro, writing a biography is writing a thriller—in Johnson’s case, a Western. You can’t stop turning the pages. He doesn’t like Johnson, but the facts are there so you can make your own judgments. I can’t recommend this book highly enough.”[14]

See also

Bibliography

  • Caro, Robert A., The Years of Lyndon Johnson: The Path to Power. 1982. Alfred a Knopf Inc., New York. (ISBN 0-679-72945-3). xxiii + 882 p. + 48 p. of plates: illus.
  • Caro, Robert A., The Years of Lyndon Johnson: Means of Ascent. 1990. Alfred a Knopf Inc., New York. (ISBN 0-679-73371-X). xxxiv + 506 pp.
  • Caro, Robert A., Master of the Senate: The Years of Lyndon Johnson. 2002. Alfred a Knopf Inc, New York. (ISBN 0-394-72095-4). xxiv + 1167 pp.
  • Caro, Robert A., The Passage of Power: The Years of Lyndon Johnson. 2012. Alfred a Knopf Inc, New York. (ISBN 0-375-71325-5). 736 pp.

References

  1. Jump up^ “National Book Awards – 1983”. National Book Foundation. Retrieved 2012-02-20.
  2. Jump up^ “National Book Awards – 2002”. National Book Foundation. Retrieved 2012-02-20. (With acceptance speech.)
  3. Jump up^ “Recipients of the D. B. Hardeman Prize”. LBJ Foundation. Retrieved 18 October 2014.
  4. Jump up^ Kakutani, Michiko (April 29, 2012). “A Nation’s Best and Worst, Forged in a Crucible”. New York Times.
  5. Jump up^ John Williams (March 1, 2013). “Robert A. Caro, Ben Fountain Among National Book Critics Circle Winners”. New York Times. Retrieved March 1, 2013.
  6. Jump up^ Staff writer (April 19, 2013). “Announcing the 2012 Los Angeles Times Book Prize winners”. LA Times. Retrieved April 21, 2013.
  7. Jump up^ Jennifer Schuessler (February 20, 2013). “Another Prize for Robert Caro”. New York Times. Retrieved December 3, 2013.
  8. Jump up^ “Biographers International Organization, The Plutarch Award”.
  9. Jump up^ “National Book Award Finalists Announced Today”. Library Journal. October 10, 2012. Retrieved 2012-11-15.
  10. Jump up^ Associated Press (November 1, 2011). “APNewsBreak: Caro’s fourth LBJ book coming in May”. CNSNews.com. Retrieved May 29, 2014.
  11. Jump up^ Erik Spanberg (March 8, 2013). “Catching up with award-winning LBJ biographer Robert Caro”. The Christian Science Monitor. Retrieved May 29, 2014.
  12. Jump up^ Patrick Beach (April 5, 2014). “Caro, LBJ biographer, is hard at work on book No. 5”. Austin American-Statesman. Retrieved May 29, 2014.
  13. Jump up^ Barbara Stone, ed. (1999). “The Round Table: Fiction, Biography And The Use Of Power”. Hampton Shorts. Water Mill, N.Y.: Hamptons Literary Publications. IV. ISBN 0-9658652-2-3.
  14. ^ Jump up to:a b c “Reviews”. http://www.robertcaro.com. Robert A. Caro. Retrieved 6 November 2015.

External links

https://en.wikipedia.org/wiki/The_Years_of_Lyndon_Johnson#Book_Four:_The_Passage_of_Power_.282012.29

Robert Caro

From Wikipedia, the free encyclopedia
Robert Caro
Robert Caro at the 2012 Texas Book Festival.
Born Robert Allan Caro
October 30, 1935 (age 81)
New York City, New York, United States
Residence Upper West Side
Education
Occupation Biographer
Notable work The Power Broker
The Years of Lyndon Johnson
Religion Judaism
Spouse(s) Ina Joan Sloshberg Caro (m. 1957)[3]
Children Chase A. Caro
Parent(s) Benjamin and Cele (Mendelow) Caro
Writing career
Genre Non-fiction
Notes
MAYBE LATER

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Robert Allan Caro (born October 30, 1935) is an American journalist and author known for his celebrated biographies of United States political figures Robert Moses and Lyndon B. Johnson.

After working for many years as a reporter, Caro wrote The Power Broker (1974), a biography of New York urban planner Robert Moses, which was chosen by the Modern Library as one of the hundred greatest nonfiction books of the twentieth century.[5] He has since written four of a planned five volumes of The Years of Lyndon Johnson (1982, 1990, 2002, 2012), a biography of the former president.

For his biographies, he has won two Pulitzer Prizes in Biography, the National Book Award, the Francis Parkman Prize (awarded by the Society of American Historians to the book that “best exemplifies the union of the historian and the artist”), two National Book Critics Circle Awards, the H.L. Mencken Award, the Carr P. Collins Award from the Texas Institute of Letters, the D.B. Hardeman Prize, and a Gold Medal in Biography from the American Academy of Arts and Letters.