David Einhorn’s Jelly Donut

The Fed is terribly, horrendously, tragically wrong. Or so says David Einhorn.

According to Einhorn, the economy doesn’t need lower rates, but higher rates. Our current low rate environment encourages future retirees to save more, not save less. Raise rates, raise them now, and in short order we’ll see a surge in spending.

Einhorn, in theory, might well be right. But he might also be wrong.


Calling Out Paul Krugman, Part 2

A couple of weeks ago, Paul Krugman wrote a mini take-down of Post Keynesian economics. The tone was acerbic. Krugman was reacting to an excellent Lars Syll piece which claimed that Krugman was not a true Keynesian because his use of the Hicksian IS-LM model implies that the future is certain, while Keynes argued the opposite.

Krugman’s response was troubling.

Why Ben Bernanke is wrong about secular stagnation

Commenting on the recent spat between Larry Summers and Ben Bernanke over secular stagnation, Greg Ip from the WSJ wrote that Bernanke has the theory while Summers has the evidence. In fact, Bernanke has neither.