Thursday, October 31, 2013

The Yale Background of the New Money Printers

Bloomberg has an important background paper on  Janet Yellen, nominated to be the next chairman of the Federal Reserve, and Koichi Hamada, a special adviser to Japanese Prime Minister Shinzo Abe. They were both students, at Yale, of James Tobin:
Fed Vice Chairman Yellen laid out what she called the “Yale macroeconomics paradigm” in a speech to a reunion of the economics department in April 1999. 
“Will capitalist economies operate at full employment in the absence of routine intervention? Certainly not,” said Yellen, then chairman of President Bill Clinton’s Council of Economic Advisers. “Do policy makers have the knowledge and ability to improve macroeconomic outcomes rather than make matters worse? Yes,” although there is “uncertainty with which to contend.”
Scary view.

Read the full article here.

3 comments:

  1. Why O Why does she take credit for the 1994 to 1999 expansion like the only thing going on was fiscal and monetary policy. I not only think these people are a bit crazy, I think there are dangerous

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  2. "Do policy makers have the knowledge and ability to improve macroeconomic outcomes rather than make matters worse? Yes"

    For Wall Street and the Empire- of course they can. For the rest us we get to shoulder the burden of their actions.

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  3. What arrogant nonsense. Will capitalist economies operate at full employment in the PRESENCE of routine intervention? Based on over a century's worth of experience, certainly not.

    Fortunately we have a mathematical formula that can be applied to the Yale macroeconomics paradigm:

    ME1 + ME2 = (H)c

    where in this case ME1 (mainstream economist) = Janet Yellen, ME2 = Koichi Hamada, and (H)c = the Hayek constant (better known as the pretense of knowledge).

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