Posts Tagged purchasing power
Frankly, these statements are incredibly stupid. Inflation means prices and incomes are rising at about the same rate. Any increase in salaries will just keep pace with inflation, leaving the consumer with unchanged purchasing power. The only way people who borrow can pay back with cheaper dollars is if the inflation is a complete surprise. If the inflation is expected, it will be part of the interest rate on the loan. Finally, higher housing prices? Give me a break. Even if housing prices rose, the real net wealth in your house wouldn’t change much because the higher price level would eat up the price increase.
Introduction Economists take it for granted that everyone knows the definition of the real interest rate: r = i – p where i is the nominal interest rate and p is the inflation rate. The real interest rate measures the net transfer of purchasing power from borrowers to lenders. Lenders will be repaid i dollars […]
Blanchard’s argument is that by raising the inflation target, nominal interest rates would be higher. This, he proposes, would give central banks more room to reduce interest rates to stimulate the economy. Unfortunately, Prof. Blanchard has made an error that should make him blush.
central banks, inflation rate, inflation target, international monetary fund, macroeconomic policy, nominal interest rate, olivier blanchard, policy prescriptions, purchasing power, real interest rate
The Newsletter SignupThe e-mail newsletter signup is temporarily disabled. If you're interested, please e-mail me directly.
- Chicago and Puerto Rico Show How Not to Do It July 16, 2015Don't buy Chicago bonds. Unless your net worth is at least $1 billion, don't buy Puerto Rico bonds. Scrutinize the holdings of any bond funds in which you own an interest.TonyLima
- Greek and German Pensions July 7, 2015No wonder the German public is, um, peeved.TonyLima
- Reddit July 7, 2015After dustup at Reddit, looks like Kleiner Perkins was right about Ellen PaoTonyLima
- The Best Take on Greece July 5, 2015This is the best take on Greece that I have seen. Warning: NSFW (language).TonyLima
- Chicago and Puerto Rico Show How Not to Do It July 16, 2015
- Thomas Friedman Op/Ed Generator http://t.co/2SCC2CPKmH, 9 hours ago
- RT @SteveSGoddard: 1913 brought the hottest temperature ever recorded on Earth, and the longest heatwave on record in the Midwest. http://t.co/0nttz99hrm, 12 hours ago
- Cryptic Clinton emails may refer to Iranian scientist http://t.co/vl64BWHPJF, 12 hours ago
- “@baseballcrank: The staggering disregard for the truth gets to @allahpundit http://t.co/RPmf9WwV9K http://t.co/gpaFRcYKw8”, 12 hours ago
- RT @JohnRBejarano: @asymmetricinfo "Price gouging" is just what people call price discovery when they don't like the price that's been discovered., 16 hours ago
- economic database demand curve tax incentive incentives widget canadian tar sands keystone environmentalists sovereign nation economic crisis heating oil synagogue capitol hill treasury secretary jack lew public health risk demand curves wood fires greek environment wood burning stoves Keystone XL social security checks arne duncan justice system o brien criminal prosecution state board of education seventh grade justice department lawsuit financial institutions reform recovery and enforcement act math education mark of shame treasuries treasury futures cme data first class postage paper checks treasury security futures options tyler durden options trading security prices seasonality jobless claims Joe Weisenthal Wesienthal economic recovery credit card payment kafka the trial roger kimball council for higher education accreditation zoning district takings clause dollar coin debt limit media scum republicans house of representatives christie lazy media Jake Tapper simple accounting u s mint national debt ceiling san jose mercury news federal student aid unemployment benefit government revenue debt clock state and local governments bls data blumer entrails seasonal patterns seasonal factors legal obligations promissory notes u s department of education accredited universities pell grants congressional budget office debt contract debt payments loan default huelskamp rmbs subprime mortgage public colleges american council on education universities in california colleges and universities in california excel plugin dow jones bureau of internal revenue stork club eric felten california state legislature introductory college courses ira flatow justice department shakedown partners in crime vaccines and autism andrew wakefield low information voter science friday flu vaccine baby boom supply side economics public higher education baccalaureate degree higher education system Cyprus onerous requirement virtual laboratory university education university buildings tuition bill russians suckers cabaret tax birth rate roof gardens taxes cyprus banks haircut deposit balances russian mafia prescription drugs us postal service david macpherson william wascher income distribution survey article david neumark national bureau of economic research minority youth trinity university youth unemployment formal sector minimum wage increases texas governor rick perry government credit downgrade freedom of speech cdos governor rick perry governor brown truck rental governor perry california businesses jobless rate black teens health care industry allscripts electronic medical records cerner corp legacy systems arra ups and fedex epic patient information goodyear french government titan international amiens france miami university supply shock french workers tire manufacturer maurice taylor french industry house speaker harry reid common market european economic community history of the european union european monetary union statistical fluke gdp growth harrisburg pennsylvania bond girl margin of error european economic union nobel peace prize energy crises tanstaafl robert heinlein campbell mcconnell oil markets oil energy nobel prize committee excel workbook employment statistics incinerator foundations of economic analysis csu system bad teachers reading comprehension unholy trinity democratic agenda teacher credentialing central limit theorem university california union dues democratic politicians voucher programs san francisco rent control finding apartments value of education landslide polls tenure decisions math capabilities california faculty association barry commoner economist milton friedman media innumeracy polling errorNBC price increases excise tax media goofs mainstream media idiots TANF welfare welfare work marginal costs mri machines marginal cost curve center on budget and policy priorities health insurance premiums twitter van de water pet scanners supply curve health expenditures ct scanners PRWORA education job search California budget waste of tax dollars CSUEB Romney Morishita council of economic advisers moon is a harsh mistress Commoner Freidman Marie Myung-Ok Lee obesity mental health treatment substance abuse treatment rehabilitation activities family assistance rehabilitation programs Social Security fail training education needy families brooke gladstone meta analysis Carney supply and demand milk prices cnbc president lyndon johnson george santayana war in vietnam war on poverty tax surcharge futures traders agricultural bill mayans tax cuts plan b sequestration limerick Dr. Goose john carney light trucks fiscal policy analysis lyndon johnson economic history instruction flipping intellectual property rights korbel educrat education bureaucracy barack obama peter king math instruction multilateral agreement geographical indications champagne region of france temporary tax change permanent income model world trade organization wto world trade organization sparkling wine intellectual property issues sparkling wines snap program market futures newshour jeffrey brown national education association pbs news hour teachers union pbs retail gasoline gasoline market Dennis Van Roekel punctuation egregious error public radio international response rate random sample political polling political economist eric zencey domestic transactions ecological economics university of vermont price of gasoline british petroleum chairman arthur levitt supplemental nutrition assistance program department of agriculture supplemental nutrition arthur levitt aol national defense authorization house republican caucus securities and exchange nutrition assistance consumer price index gas prices fixed cost consumer search bp consumer confidence career success consumers commerce department david blanchflower kai ryssdal AmeriCorps politics Hawaiian independence native Hawaiian corporate income tax snack tax suicide luxury tax yacht tax Hawaii spelling is hard Texas data journalists population density San Francisco Muni SF Muni Valparaiso zero emissions hybrid post hoc dmv Fed Yellen euro breakup innovation information incentive banking bank regulation hospitality Mulligan Douthat baseball Jeter auto computer hidden tax Yankees marginal revenue product cults productivity wage Gaza annual revision first quarter investment backward looking forward looking demand elasticity price discrimination poverty export beef price shock estimates Freddy Mac Fannie Mae Mel Watt housing bubble Ackman 2014:1 MediCal Medicaid negative interest rate Neumark Burkhauser car loans affordable car act Ferguson Benko BEA historical data third estimate second estimate advance estimate Volcker subject matter knowledge earned income tax credit Lundstrom Sabia Atlantic NIPA Google Davidow value added foreign exchange Hungary crypto-currency ricardo stolen ssn bad credit schwartz friedman Schindler OPM ten dollar bill credit TISA investment collapse Subaru light truck tariff Los Angeles union TPP imf zirp Goldberg Eshoo reddit Kristi Culpepper Megan McArdle euro-drachma pao ellen pao Illinois Chicago kleiner-perkins mea culpa TAA Mr Roadshow Title II FCC gary richards value of human life marriage tax penalty same-sex marriage Obergefell BAAQMD Bay Area Air Quality Management District economic policy cronyism art J.S.G. Boggs exchange rate The Interview IP investment intellectual property subprime rv loans employment parent participation Lerner Index market power monopoly monopoly pricing elasticity Maryland McArdle satire rain tax tastes of life life challenge of michigan tax policy default risk premium my first client heroine Rubio Lee air pollution inversion John Taylor spam reserves TPPP confusion pricing cell phone credit rating debt ownership daily signal kelsey harness charity buzz looktothestars Bullis Charter School LASD checks checking account BCS michelle obama food trucks economic profits negative externalities jpmorgan overdrafts selling securities intragovernmental holdings publicly financed stadiums Siegfried reallocation second chance checking accounts overdraft fee bank of america overdraft fees market imperfection school cafeteria capital gains saving dollar wealth interest rent john crudele global competition dissaving income money bureaucrats school lunches externality entrepreneurial opportunity economic activity misdemeanor conviction mary jo white plea bargain government bureaucrats Noll humphreys pboc lender of last resort liquidity crisis reinhardt bank of china crunch carbon tax david kestenbaum henry jacoby bond market federal debt incomes embarrassment gura forum program employment data cps rogoff 30 year treasuries u s treasury bonds john reilly george akerlof college enrollment detroit michigan presidential campaign cbs news professional sports facilities robert whaples red wings dennis coates andrew zimbalist jim messina chapter 9 bankruptcy moral hazard adverse selection asymmetric information victorville daily press lisa benson political cartoons part time job full time work new york post survey work Ricoh Staples New York Times stupid underground economy online order system Intuit best of the web tax refund TurboTax black market Venezuela price control Bloomberg View Bloomberg Sperling price rationing shortage excess demand excess supply surplus food prices commodity prices FDIC government waste stupid policy self-deportation third-party payments first amendment celebrity lunch suppression second amendment illegal immigration puerto rico debt Crimea Russia custody account municipal bankruptcy Stockton Detroit Harrisburg San Bernardino Sebelius bad research AMAC Association of Mature American Citizens aarp american association of retired persons antitrust Denise Cote Bromwich Michael Bromwich Cote federal government program capitalist system single point executive branch economic data falsification mandates evsey domar magical thinking economics research michael reich bully health insurance industry newspeak Orwell health care Zanny Minton Beddoes stock split stock buyback war on drugs ivory Tim Cook full time Bishay single payer health insurance companies private health insurance health insurers mistake Shereef Bishay Dev Bootcamp BPPE tweets polling firms term yields stimulus bond yields fomc susan pulliam southeast asian countries scott adams bad management patents inventor john c dvorak smart employees economic woes insider trading legitimate research tax increases shoot from the hip where are the jobs small businesses Foxcon Foxconn john maynard keynes fbi apple computer macintosh computer equity research crackdown ipods copyright law inventions robert j gordon stanford university business cycles joe gagnon federal reserve board institute for international economics david romer james poterba martin feldstein harvard univerity jeffrey frankel economic fluctuations cambridge massachusetts monetary affairs international finance administrative services medical practices cost of health care economic efficiency monopolies technology impacts mr bush birthing centers free exchange apy patient communication systems electronic health records expansion bill Foxcon suicide China suicide global credit credit markets medicare reform proposal corwin plurality tea party financial literacy federal reserve bank national literacy summit indebtedness government budget deficits federal reserve bank of chicago visa inc pundit senator chris dodd members of congress countrywide financial taxpayer money professional athletes interest parity monetary policy committee favorable treatment barry bonds performance enhancing drugs mortgage interest rates new york times columnist chris dodd food and drug administration debt government u s treasury department class attendance attendance rates lubbers college faculty higher education going to college grade inflation national public radio deregulation Alfred Kahn airlines CAB Civilian Aeronautics Board wikipedia scientific method trillion exxon budget http://gonzoecon.com/wp-ad treasurydirect gov lucifer exxon mobil federal government spending TheTruth Wears Off evil corporations obscene profits walmart nber research associate 1 million econometric model subprime market financial crisis sound economic policy economic advisers president roosevelt financial models david brooks domestic spending census bureau press seasonal variation financial market meltdown subprime mortgages labor markets four more years census workers government takeover job creation minneapolis fed biggest banks gary stern loan applications student loan program mobile version iphone blackberry Android political favoritism policy prescriptions cuba bank of india foreign nationals remittances money transfers bernard madoff wall street paypal india money state of the economy banking crisis indian regulators personal payments reserve bank of india stock market losses ancient mayans smith barney 1098 forms Merrill Lynch Roth IRA military court ksm interest free loan champion martha stewart stewart sentencing five months 100 million fraud ron feldman monetary instruments fiscal stimulus debt instruments mr cameron stimulus package transfer payments david cameron government issues credit card balance crash data toyota vehicle nhtsa driver error budget surpluses fiscal policy economic forecasters financial institutions hedge funds financial instruments hedge fund trusts charities limited partnership pension fund managers government policies bernanke wages mandate confidence sudden acceleration national highway traffic safety administration limit order trades djia wsj bls web employment prospects market crash durable goods economies of scale tbtf w wilson private domestic investment business inventories economic events separations unintended consequences international airline subsidies toyota motor corp acceleration problems european competitors european governments optimism layoffs emirates airlines airbus a380s european airlines brazil government northwestern university municipal bond interest local taxes muni growth FLA TLA interest payments charitable contributions health care benefits dividend income taxing capital tax preferences mortgage interest three letter acronym four letter acronym calubtun Ponzi NBER Business Cycles Committee Kathleen Hays St. Louis Fed Stewart ERM nominal interest rates nobel prize in economics Zuckerberg criminal grexit tax expenditures budget proposal federal prosecutors european currencies customer funds customer accounts small business innovation research defense authorization act joe nocera Galbraith benefit cost ratio mini vans benefit cost analysis station wagon department of transportation national defense authorization act government grants venture capital ee times World Bank Jim Yong Kim capital gains tax community organizer businessweek startups cleantech accredited investors vc firms sec regulations energy program economic stimulus unconventional counterfeit ben franklin security features unemployment benefits robert solow endogenous growth theory color copier counterfeiters queens college science math color laser printer abe lincoln security thread factor productivity social infrastructure Airplay streaming video Mountain Lion home theater system imdb internet movie database Charles Jones Robert Hall technological growth paul romer devaluation max weber rule of law numerical skills brandeis university bank lending medical device manufacturer housing crisis mortgage originations mortgage finance discrimination lawsuit medical device makers PET scanner LFPR Anna Schwartz debt to gdp ratio medical device tax CT scanner banking history mortgage brokers Draghi Mars Hacker algebra is hard andrew hacker Martian banks martian math is hard Costco tax havens offshore bank james henry rear view mirror denison chocolate consumption debt crisis cocoa prices chocolate lovers chocolate holidays new businesses unemployed workers seasonal holiday Official inflation rate civilian labor force labor force participation government jobs cocoa optimum currency areas leading indicator statistical tools disposable income per capita income california gasoline new host french champagne leading economic indicators eurozone countries euro exchange rate deutschemark adjustment mechanism market reforms inflationary pressures regulatory uncertainty houghton mifflin patricia bosworth barbarella jane fonda california public employees retirement system hanoi hurricane irene roger vadim brazilian real rear view camera depreciation copom debt plan public employees retirement system CalPERS euro countries allan h meltzer Supersad True Love Story northern euro u s government bonds corporate bond yields gary shteyngart national labor relations board ken rogoff california state government unemployment insurance benefits payroll tax reduction transportation projects green standards quadratic formula tim geithner san jose executive office of the president compliance rate wtop segraves santa clara sunnyvale bus lanes bus rapid transit vta brt palo alto delinquency rate population estimates durable goods orders green cepr california government stupid capital goods hens eggs AAPL employment unemployment Boockvar bad analysis david owen valley transportation authority office of the president ethanol production biofuel ethanol technology yield curves real yield curve TIPS government mandate cellulosic ethanol high school diploma EEOC santa clara valley transportation authority Constitution ethanol nominal yield curve Greece crisis middle class taxpayers california state taxes tax simplification alternative minimum tax tax preparation expectation inflation curve information goods cengage principles of economics aplia federal government regulation apple store information economics IRS mainstream media exchange rate risk free trade agreement southern euro karl rove debt ceiling optimal currency area fomc meeting graduation rate department of justice treasury notes Mundell federal government debt new yorker u s treasury mountain view los altos complexity Euro crisis government mf global eric holder personal income Dave Barry fedex Argentina treasury inflation protected securities inflation protected securities employment report discouraged workers ups dean baker mortgage backed securities 1099 forms international monetary fund olivier blanchard inflation target inflation rate central banks retail sales macroeconomic policy bad spelling tax returns economics Stanford dividends financial meltdown U.S. economy citibank Great Recession downward revision collateralized debt obligations financial markets sophisticated investors government spending treasury bills bank reserves jonathan bush wells fargo money supply new jobs health care bill economists great depression unemployment numbers bls gov economy athenahealth economic principles The Economist affordable care act municipal bond Bitcoin Taranto archaic regulations default city of detroit economist informal sector usps minimum wage hike empirical studies princeton European Central Bank slow growth education free trade hack TPA bankruptcy debt facebook ipo sovereign debt uncovered interest parity currency subprime Krugman subprime auto loans California operation choke point environment u s postal service economic analysis statistics pollster Reed Hastings government regulations Social Security free lunch california state university east bay Netflix economic growth optimum currency area dexit ipo unemployment banking system canada banks milton friedman political science congress Dodd-Frank stock market national debt ken gardner Treasury population survey john boehner debt obligations food stamps teachers unions kqed statisticians charter schools national income accounting treasury securities paul krugman treasury department david burge government bonds paul ryan household survey excess reserves alan krueger amazon innumeracy consumer spending purchasing power nominal interest rate bailout bls securities and exchange commission Madoff ben bernanke inflation expectations bush tax cuts government budget deficit yield curve healthcare Germany common core bonds fred database government data regulation mitt romney choke point math SEC public debt fail federal reserve bank of st louis municipal bonds jon corzine algebra PACA iowahawk marketplace seasonal adjustment california state university default risk real gdp recession census bureau Apple real interest rate obama stupid Puerto Rico facebook humor tax interest rates jobs ecb bureau of economic analysis ObamaCare bureau of labor statistics inflation government debt Greece eurozone gross domestic product federal reserve labor force participation rate npr ACA monetary policy wall street journal gdp minimum wage unemployment rate euro new york times featured