Dani Rodrik's Parable of Trade

Dani Rodrik posted his parable of trade and an explanation on his web page - it is a short and simple reading that shows the benefits (and social costs) of trade. This will be on my reading list from here on.

Deficit Debate - Krugman vs. Holtz-Eakin

The PBS News Hour has a good debate about the deficit and debt debate between Paul Krugman and Douglas Holtz-Eakin.

Watch the full episode. See more PBS NewsHour.

Why Can't Economists Agree on Deficit?

Mark Thoma has a good article in Fiscal Times about the reasons why economist disagree over the Federal deficit. As Thoma points out, and explains, the divide between economists is based on the classical-Keynes split.

Ryan and Obama Plans Side by Side

The New York Times has a good chart that lays out the differences between the Ryan and the Obama deficit reduction plans. Let the debate begin.

Debt Ceiling Video

Paul Solomon on the PBS News Hour has a good video about the issues involves in the debt ceiling debate, its effect on the economy and how it is viewed on Wall Street. It is very informative and good for teaching the concept.

Watch the full episode. See more PBS NewsHour.

Structural vs Cyclical Unemployment Debate

Christina Romer has a good column in the New York Times on the current debate over the rise in the natural rate of unemployment and whether the current unemployment problem is cyclical or structural. Romer does a good job showing that most of the current unemployment problem is the result of cyclical issues and not structural (mismatch of job creation to the skills of the unemployed or a "housing lock" of people tied to underwater mortgages). However, she also makes the case for why the government should be concerned with increases in structural unemployment.

Debate over the Debt Ceiling

Now that the current budget debate is over, the next debate will be over raising the debt ceiling. This debate will be coming to its :do or die" time over the next five weeks. This debate is more important. The temporary shutdown of the Federal government would have been not good, but the failure to raise the debt will be a big bad that could have wide ranging consequences for the U.S. and world economies. So, as this debate gets going, it is time to look at the current composition of the debt. The New York Times published this graphic showing the history of rising the debt ceiling and the composition of the current debt. Three points to look at on this. First, look at the amount owed to Social Security. Second, the amount added to the debt by the Obama stimulus plan. Third, the amount added by the various programs of George W. Bush. Interesting that only now the Republicans are worried about the debt - so much so that they will threaten the creditability of the U.S. on world financial markets.

The Civil War and the Great Monetary Experiment

The blog Macro and Other Musings has a good post on the three monetary systems the United States used during the Civil War (Green bank fiat currency in the North, State backed fiat currency in the South and Gold back currency in California). The comparisons between the systems and effects on the war are interesting. Because, the value of Confederate money depended on the war situation, it value fluctuated during the war. The graph below show this:

Fed - Central bank to the world

Gretchen Morgenson in the New York Times puts together the pieces to show how the Federal Reserve loaned hundreds of billions of dollars to European banks in the run up to the financial crisis. It is interesting how European banks turned to the Fed and not the ECB in this point of crisis.

Long Great Recession

Unemployment is down to 8.8% - that's good. How does this recession match up with post-war history? It is still the worst. Check out the chart below from the blog Calculated Risk (via the Economist's Free Exchange blog):

Cost of Living and Poverty Level

The New York Times has a good article about how much it costs to have a basic standard of living and how it compares to the Federal poverty level. Simply, the gap is huge. Considering 14% of Americans are at or below the Federal Poverty level, the percentage of those not able to have a basic standard of living is substantial. The chart below breaks down the difference between the two.