Rowley Versus DeLong On The State Of Macro

This is one of those naughty little contretemps I just cannot resist reporting on. So, Charles Rowley of George Mason has been posting "on the State of Macroeconomics" in the past few days. One post was not too unreasonable, slamming the longstanding assumption in favor of rational expectations, http://charlesrowley.wordpress.com/2010/01/10/how-macroeconomics-lost-its-way-1-theory-ignores evidence. The third of these, which can be linked through http://www.coordinationproblem.org/2010/01/charles-rowley-on-the-state-of-macroeconomics, (new name for The Austrian Economists) is a much less admirable and defensible affair, although he made a better case for himself in some of his comments. It is basically a weak anti-Keynesian screed that includes the following quotation: "The Keynesian model never worked; and never will work. It has been resuscitated by opportunistic economists, not because they believe in its merits as an agent of macroeconomic rehabilitation, but because they recognize its political value as a weapon for moving economics from laissez-faire capitalism, or (hopefull) beyond to fully-fledged socialism."

Now there is much to criticize in those remarks alone, along with the rest of the post. However, Brad DeLong proceeded to make a complete fool of himself by jumping in on this with the following comment: "Why do you lie about what I think?" Rowley then very reasonably pointed out that he named no names in his mostly egregious post, but this triggered DeLong to call him a "coward." When Peter Boettke reposted and linked this on Coordination Problem, Brad jumped in there also to accuse Boettke of lying. This is a pathetic decline for Brad, who has long had a record of excessively deleting comments (and I think most of what he posts is very intelligent). Really too bad.

Rowley's further explanation, which made some sense, although it was not in his original post, was that he was annoyed with economists who had been labeling themselves "New Keynesians," which models do generally assume some ratex, but who were now advocating old-fashioned "hydraulic Keynesianism" in the current situation. He said that there were many such who had this inconsistency problem, not just Brad, although he said he had no problem with genuine "old Keynesians" who had never lost their faith, mentioning Robert Solow in particular by name. Whoosh!

Hansen Tries to Explain Why He Appeared to Be Confused, But Just Adds to it

When Jim Hansen, a genuine hero in the world of climate science, published an op-ed in the New York Times last December, he was excoriated by many writers, including yours truly. The piece was deeply confused, almost incoherent, in its attack on carbon caps and defense of carbon taxes.

Now Hansen has published a new account of “what I really meant”. It is just as muddled as the original. Hansen tells us, for instance, that he knew all along that caps and taxes are reflections of one another:

I do not dispute the economic theory that a cap and a fee are, in principle, equivalent. But cap and trade's complexity allows special interests to take over, killing its effectiveness.

(Actually, caps and taxes are not equivalent in a world of uncertainty, but we will let that pass.) So now the claim is that taxes are simple and pure, while caps are murky and lead only to corruption. This is no doubt true if you compare a perfect, hypothetical tax to an actual, highly compromised cap. If Hansen thinks that a tax system passed by Congress will be the pristine, comprehensive, loophole-free policy of his dreams, he hasn’t had much contact with the IRS recently.

What he can’t seem to get clear on is that he has two entirely legitimate complaints, but they have nothing to do with caps vs taxes. Hansen is against giving away carbon permits and against offsets. I (and many others) agree with him completely. This should be a reason to weigh into the public debate against giveaways and offsets. But no, he says the solution is to switch to a tax—as if there can’t be giveaways (rebates) and offsets (credits) in a system of carbon taxes.

Finally, he dumps on the Cantwell Bill, which proposes a carbon cap without giveaways and offsets—a bill that is as short, sweet and uncomplicated as anything you could hope for. Why? Well, it’s a cap, and, you know, complicated and sure to be stuffed with giveaways and offsets and....

Cochrane Too

Cassidy has him saying:

What efficient markets says is that prices today contain the available information about the future. Why? Because there’s competition. If you think it’s going to go up tomorrow, you can put your money where your mouth is, and your doing it sends (the price) up today. Efficient markets are not clairvoyant markets. People say, “nobody foresaw saw the market crash.” Well, that’s exactly what an efficient market is—it’s one in which nobody can tell you where it’s going to go. Efficient markets doesn’t say markets will never crash. It certainly doesn’t say markets are clairvoyant. It just says that, at that moment, there are just as many people saying its undervalued as overvalued.

To be filed under “not understanding the difference between necessary and sufficient conditions”.

Fama’s Fallacy

Listen to this excerpt from his interview with John Cassidy:

Back to the efficient markets hypothesis. You said earlier that it comes out of this episode pretty well. Others say the market may be good at pricing in a relative sense—one stock versus another—but it is very bad at setting absolute prices, the level of the market as a whole. What do you say to that?

People say that. I don’t know what the basis of it is. If they know, they should be rich men. What better way to make money than to know exactly about the absolute level of prices.

He makes this point several other times within a few minutes: we know markets are efficient because they are unpredictable.

But those famous monkeys, who sat at their keyboards for centuries hoping to randomly tap out Hamlet, could just as well be inputting unpredictable asset prices.

How can someone be a world famous financial economist and not know the difference between necessary and sufficient conditions?

A Hatchet Job on the Landesbanken

Today’s New York Times putdown of public banking in Germany was probably not intended to be ideological, but, with the luck of the Rolodex, that’s how it turned out. It is certainly true that several Landesbanken have engaged in stupid and even corrupt practices and have needed to be bailed out. What’s missing, however, is the context.

Contrary to the claim by the EU official quoted in the article, Brussels has been on the warpath against the Landesbanken for years. They have been under intense pressure to demonstrate market rates of return, to show that they are not subsidizing domestic credit in Germany. But they have no competence in speculative finance; their stock in trade is financing the extraordinarily productive Mittelstand—the small, family-owned enterprises that outperform any other SME sector in the world and provide the basis for the country’s export machine. Forced to show instant hyper-profits, these naive public bankers went out and loaded up on mortgage-backed securities, Icelandic delicacies, and other such fare. In other words, they tried to turn themselves overnight into poster children for EU financial neoliberalism and got seriously burned.

No doubt Brussels will use this disaster as an excuse to put still more pressure on Germany to move to a private, profit-driven financial system. The consensus in Germany, however, is to find a way to restore the Landesbanken and return them to their core task of maximizing the profits and productivity of their borrowers. American readers would be better informed by an article that described the EU’s campaign for financial liberalization and the role it played in making Europe even more susceptible to a financial implosion whose epicenter was the US.

Class Coalitions and Keynesian Fiscal Policy

I’ve been rethinking some of my earlier writings (this is almost always true), and have changed my views on the political economy of Keynesian fiscal policy.

Old view: Keynes offered the twentieth century’s most influential example of an economic policy that depended on, and also galvanized, a coalition between workers and employers. By recognizing that workers are also consumers and that profits depend on consumption, expansionary fiscal policy à la Keynes identified a common interest in high levels of employment, and therefore wages. While it would not be in the individual interest of any employer to raise the wages of his or her own workers alone, it is at least potentially in the collective interest of the class of employers to enlist worker-voters to support an economy-wide program to bolster worker incomes. This coalition has atrophied for a number of reasons during the past generation or so, and seriously expansionary policy is invoked only in times of economic distress.

New view: Keynesian fiscal policy was central to class coalitions in the liberal, English-speaking world, as above. In the main non-liberal capitalisms coalitions formed over policies to achieve high employment through high levels of investment. This was pursued through public ownership, public-private partnerships, worker and public stakeholder influence in corporate investment policy, and other “microeconomic” mechanisms. As long as these policies worked, additional stimulus via fiscal deficits, at least during non-recessionary times, could legitimately be criticized as inflationary. This helps explain why fiscal expansion has a bad reputation in Germany and Scandivia and a dubious reputation in France. These investment-centered coalitions have proved more durable than consumption-centered ones, although the current crisis, which may yet result in a prolonged period of dampened investment, could put them to the test.

How does Japan fit into this story?

Massively Misrepresenting the Econoblogosphere: "Blogometrics"

The lead article for 2010 in the Eastern Economic Journal (vol. 36, no. 1, pp. 1-10) is "Blogometrics" Franklin G. Mixon, Jr. and Kamal P. Upadhaya. It claims to rank economics bloggers, blogs, and universities, by the scholarly impact of the bloggers in question. This may be a worthy effort, but there is a complete mystery as to the set of blogs that they use in this study, with it apparently being tilted heavily towards Austrian or libertarian blogs, with none "further left" than either Brad DeLong's blog (a former official in the center-left Clinton presidency) and Mark Thoma's Economists View. While highly read Mankiw, Marginal Revolution, and Freakonomics are included, Krugman's blog is not, with him probably being more "progressive" than any of the 83 bloggers listed, of whom it is probably a race between DeLong, Thoma, and the late Paul Samuelson as to who is the "lefiest." As it is, of the 40 blogs considered, at least 5 are Austrian and at least another 5 are overwhelmingly libertarian. In terms of university rankings, while Harvard does come in at #1, George Mason is #16, while Princeton is not even on the list of 44 universities ranked. In the body of the paper it is stated once that they are studying the "main contributors to some of the most well-known blogs," although no method of selecting those is provided. On one table they give average page views per day from the EconDirectory of Gongol for 16 of their 40 blogs. Only three of these blogs are in the top ten of Gongol, with only only 7 of them coming in above the 426 for Econospeak (rank for Dec. 09, 59th), with one of them, macroblog, coming in at zero, and another that was listed as 963, at zero for the latest listing. I list below their list and top 40 from Gongol's most current posting, with commas separating the names of the blogs from the respective lists. I also note that they overstate the dominance of Americans in the econoblogosphere.

Mixon-Upadhaya Gongol
(rank by scholarly impact of
"main contributors) (rank by AVPD)

Becker-Posner, Calculated Risk
Greg Mankiw's blog, Michael Shedlock
RGE Monitor, Big Picture
Inside the Economist's Mind, Marginal Revolution
Neuroeconomics, Naked Capitalism
Organizaion & Markets, Gregory Mankiw
Freakonomics, Baseline Scenario
Game Theorist, Economist's View
Vox Baby, Tax Prof
John Lott's Blog, Credit Writedowns
Grasping Reality with Both Hands, VoxEU
Daniel W. Drezner, Coyote Blog
Marginal Revolution, European Tribune
Economist.Mom.com, Gongol
macroblog, Financial Armageddon
Core Economics, Carpe Diem
Environmental Economics, Overcoming Bias
EconLog, Half Sigma
Cafe Hayek, Angry Economist
Division of Labour, Carl Futia
The Sports Economists, Angry Bear
The Austrian Economists, Triple Pundit
Hypothetical Bias, Economic Edge
Dynamist.com, QandQ
Economics Roundtable, Mess that Greenspan Made
Economist's View, Trader Mike
Mises Economics Blog, EconBrowser
Adam Smith's Lost Legacy, Tim Worstall
timharford.com, Economic Populist
Economic Principals, Wages of Wins
the Attention Economy, John Lott
Reasonable Bystanders, Fistful of Euros
Newmark's Door, Ekonomi Turk
Market Power, Willisms
ElectEcon, Visualizing Economics
Equinometrics, Random Roger's Big Picture
Knowledge Problem, Art Diamond
The Perfect Substitute, Environmental Economics
The Blog of Diminishing Returns, Bonddad Blog
The Capital Spectator, Roth and Co.

Sins Of The Sons Of Samuelson: More From Atlanta

Also in the HES/AEA session I organized in Atlanta was a paper by David Colander and Casey Rothschild entitled, "Sins of the Sons of Samuelson: Vision, Economic Pedagogy, and the Zigzag Wadnerings of Complex Dynamics," available at this link. They argue that Samuelson was aware of complex dynamics and how math models could simplify insights in Marshall and others that had been expressed only in the "zigzag wanderings" of literary expression. They blame the "sons of Samuelson" for turning the push to math models, certainly led by Samuelson, into a mindless dogma that oversimplified economics and misled many in many different ways. They proposed how to change intro textbooks to open students' minds to complexity (and Rothschild will be joining Colander as a coauthor in future editions of his popular intro textbook).

Rajiv Sethi has just posted on Samuelson's own interest in nonlinear dynamics, citing my mentioning a paper by Samuelson on Mark Thoma's blog, with Thoma linking to the Sethi piece. Sethi discusses the nonlinear version of Samuelson's multiplier-accelerator model, which appeared in the same year (1939) as his much more famous linear version. Sethi notes that I had brought this up on Thoma's blog only two weeks prior to Samuelson's death.

As a matter of fact I cite that paper by Samuelson in the paper I presented in the session at Atlanta, "Chaos Theory Before Lorenz," available on my website and also having appeared recently in print in a special issue of Nonlinear Dynamics, Psychology, and Life Sciences, honoring the late Edward Lorenz, the MIT climatologist who was reputed to have "discovered chaos on a coffee break" back in 1961. He was the person who coined the term "buttefly effect."

A Festschrift For Me (Brag, Brag)

If you cannot brag where you co-blog, where can you? Anyway, a book has just been published, _Nonlinear Dynamics in Economics, Finance and the Social Sciences: Essays in Honour of John Barkley Rosser, Jr._, edited by Gian-Italo Bischi, Carl Chiarella, and Laura Gardini, Berlin/Heidelberg: Springer, 2010. Unfortunately it is very expensive. It contains papers presented at a conference held at the University of Urbino in Italy in late September, 2008, honoring my 60th birthday, which was in April of that year. I gave a plenary talk there (not in the volume), and they were very nice to me (the Italians know how to do these things right, :-)).

Bring back The Sedition Act

So I'm reading a very interesting and funny book by Bill Bryson, Made in America, a history of American English, and I come across this oddity:

"The Sedition Act of 1918 made it illegal, among much else, to make critical remarks about government expenditure or even the YMCA."

All you windy fiscal stimulus denialists in the Windy City - you know who you are! - DO NOT PASS GO , DO NOT COLLECT $200!

Euroland Hardball? Atlanta Rumors

One hears things in the hallways of American Economic Association meetings, and I heard some rumors from sources who will remain anonymous but are well connected at the recently finished meetings in Atlanta. So, when the new Greek prime minister came into office in mid-December, George Papandreou, what had been reported as a budget deficit of around 6-7% of GDP, already unpleasantly above the Euroland official limit of 3%, turned out to be more like 12-13%, if not worse. Spreads on Greek bonds have gone way up, and there is a sense of crisis on the nation's foreign indebtedness. It needs help from the ECB and the Eurozone countries more generally or else faces tough cuts. These are probably coming anyway, but Papandreou is resisting somewhat. The rumor is that hardball negotiations are getting going between him and the effective leaders of the Eurozone, Merkel and Sarkozy. The latter will be putting a lot of pressure on Papandreou, but he may use the threat of removing Greece from the euro as a counterpressure. Now many might suggest that this is not much of a counterpressure, given that various eastern European countries are begging to join the euro in the current situation, as is even formerly aloof Iceland (not even in the EU yet). However, it is probably the case that Merkel and Sarkozy do not wish to open the door to having countries leaving the euro (as others might be tempted to follow if a devaluation by Greece works out well in terms of employment growth). France and Germany have worked very hard over a several decade period to make the euro as solid as the Deutsche Mark, and having anybody leave might trigger a more general unraveling of the euro, something long forecast by some US observers such as Martin Feldstein.

It occurs to me that the rise of the US dollar over the last month from around 1.51 to the euro to more like 1.43 might in part be due to the worries about such possible defections (even though presumably the countries still on the euro would be "stronger" ones). At a minimum this will probably scotch any moves to make the euro replace the dollar as the major world reserve currency in the near term (and other alternatives such as the yuan/renmimbi are nowhere near being ready to step in). I must also note that this recent rise of the dollar rather makes ridiculous recent reports, such as one in the Washington Post today, that the rising price of oil in the last few weeks is due to the falling dollar. What falling dollar? I continue to be astounded by the decreasing competence of newspaper reporters on economic matters.

Volcker says its all broken

"The American political process is about as broken as the financial system....The Treasury is an outstanding example of a broken system, but it's not the only one....I think people have lost confidence in government, they've lost trust in government, and it shows. This isn't a question just of this Administration. It's been kind of a steady, downhill path." [*]

[*] Business Week: At the Table December 30, 2009, 5:00PM EST
Paul Volcker: The Lion Lets Loose
Charlie Rose talks financial reform with former Federal Reserve Chairman Paul Volcker
Business Week: At the Table December 30, 2009, 5:00PM EST
http://www.businessweek.com/print/magazine/content/10_02/b4162011026995.htm

The Oil and Money Straitjacket

David Holden and Richard Johns, in their 1981 book ‘The House of Saud: 'The Rise and Rule of the Most Powerful Dynasty in the Arab World’ describe how Saudi oil money was used to hire American firms to industrialise Saudi Arabia with the overall management and fiscal responsibility delegated to the US Department of Treasury. The commission so set up was “independent to the extreme”. “Ultimately, it would spend billions of dollars over a period of more than twenty-five years, with virtually no congressional oversight. Because no US funding was involved, Congress had no authority in the matter, despite Treasury’s role. ”[1]

I wonder how effective monetary policy could be in the US under such a large and secret money regime?

David Holden was murdered in Egypt in December, 1977, while his and Johns’ book was still a work in progress. “Some say that Holden pried too deeply, and that is why he was murdered, others ascribe his death to a case of mistaken identity; almost certainly the truth will never be known.” [2]

A reviewer of Holden and Johns’ work noted that there are “some wonderful nuggets of insight [that are] not discussed in other books. For example a quote from Kissinger's own doctoral dissertation:

"... not shy away from duplicity, cynicism or unscrupulousness, all of which are acceptable tools of statecraft." (p 348)

and, after the death of King Faisal, a quote from the Washington Post:

"[King] Faisal probably did more damage to the West than any other single man since Adolf Hitler." (p382)

Why was the Washington Post so against Faisal?

As it turned out this Saudi Arabian leader was assassinated in March 1975. The timing is interesting. It was only two days before Faisal’s death that the former left-wing Australian Deputy Prime Minister (Jim Cairns) and Australian Senator Wreidt met him in order to negotiate a very large loan for Australia to fully develop its domestic energy infrastructure. This included moves toward the use of solar energy. King Faisal assured Cairns and Wreidt at the time of “the fullest possible cooperation of Saudi Arabia about oil, food and monetary or investment matters.” Cairns believed “it was possible for large sums of money to have been borrowed at far lower rates of interest than would have had to be paid in Australia, and perhaps elsewhere.” [3]

Cairns noted that “the death of King Faisal and later the disarray of the Australian government prevented any progress in 1975. That was the year many Australians point to a coup against Australia’s last social democratic Labor government having occurred with American CIA involvement. [4] Jim Cairns was removed from the office of Treasurer by the then Prime Minister Gough Whitlam after the mainstream newspapers in Australia (virtually then under the control of only three families – Murdoch, Fairfax and Packer) engaged in a campaign attacking the credentials of Cairns. The Melbourne Age, for instance featured banner headlines claiming a member of Cairns family was to get $600,000. Cairns wrote: “It was never possible for anyone to get one cent as a result of anything I, or the government, or any member of it did or did not do.” [5]

Cairns was aware that the aim of the USA at the time was take control of the distribution of oil funds in international financial markets “rather than be lent directly, especially in government to government loans”. “In Washington in October, 1974, OPEC was anathema. If there were to be any ‘cartels they had to be American controlled.”. Cairns added:

“I got the impression, both in Washington and New York, of confidence that oil pressures could be successfully resisted without any military action [6], and that American financial houses could soon regain control of the investment of oil funds.”[7]

And so they did. Wall Street banks monopolized the recycling of petrodollars and the US government acquiesced in vastly inflationary oil price rises in order (at least partially) to bail out its defence contractors. In Australia it was the end of an era. After a relentless oligopoly media campaign, on 11th November 1975 the ‘bunyip aristocracy’ of the Liberal-Country Party coalition came to power in Australia under Malcolm Fraser. It was constantly referred to in Australian corporate media as a ‘landslide’ defeat for Labor, but the party acquired 43.8 percent of the votes – even with the incessant anti-labor campaign – and received only 28 percent of the seats. Cairns thoughtfully wrote in 1976 that such an outcome “may have brought the end of the apparent two-party system.”[8] He was right.

“The strait-jacket was there, and it proved to be one made of money.” [9]...and oil.

[1] [1] David Holden and Richard Johns, ‘The House of Saud: The Rise and Rule of the Most Powerful Dynasty in the Arab World (New York: Holt Rinehart and Winton, 1981), p359. As quoted in ‘Confessions of an Economic Hitman’ by John Perkins. Page 84. Published by Ebury Press Random House, 20 Vauxhall Bridge Road, London SWIV 2SA. 2005. ISBN 978091909109

[2] John P Jones III (reviewer of Holden and Johns book at Amazon).

[3] Jim Cairns ‘Oil in Troubled Waters’1976. Widescope International Publishers, Victoria, Australia. Page 92

[4] A Coup in Australia and the CIA
Brenda Rosser. Saturday, July 5, 2008
http://econospeak.blogspot.com/2008/07/coup-in-australia-and-cia.html

[5] Jim Cairns ‘Oil in Troubled Waters’ 1976. Widescope International Publishers, Victoria, Australia. Page 92

[6] Jim Cairns ‘Oil in Troubled Waters’ 1976. Widescope International Publishers, Victoria, Australia. Page 82

[7] Jim Cairns wrote: “On January 3, 1975, Dr Kissinger, American Secretary of State, indicated that in some circumstances a ‘takeover of Arab oilfields was a possibility’, not because the cost of fuel had quadrupled, but that it would be ‘another matter where there was some actual strangulation of the industrialized world.’ At about the same time Professor Robert Tucker of John Hopkins University had issued a paper settling out the pros and cons of an American seizure of parts of Kuwait and Qatar. He believed that even if the Arabs set fire to the oil wells it would take only a few months to have the oil flowing freely again. He was satisfied that Russia would not intervene.” Jim Cairns ‘Oil in Troubled Waters’ 1976. Widescope International Publishers, Victoria, Australia. Page 79

[8] Jim Cairns ‘Oil in Troubled Waters’ 1976. Widescope International Publishers, Victoria, Australia. Page 129

[9] Jim Cairns ‘Oil in Troubled Waters’ 1976. Widescope International Publishers, Victoria, Australia. Page 130.

Mirowski On The Market Crash

At the recently completed AEA/ASSA meetings in Atlanta I organized a joint HES/AEA session on "Complexity in the History of Thought." Speakers included me, David Colander, John Davis, and Phil Mirowski of the Notre Dame department that is about to be abolished. He spoke provocatively to an overflow audience on "Inherent Vice: Complexity vs. Behavioral Explanations of the Crisis." In this he dismissed views that emphasized "bad behavior by individuals" including irrationality and corruption as causes of the crash and larger breakdown. He argued that it was a systemic problem, doing so by extending his recent idea of markomata, that markets are fundamentally algorithms that evolve as competing systems with increasing levels of hierarchy in the form of futures and derivatives markets. While conventional theory says such developments should improve efficiency and spread risk, they can lead to increased fragility as the rising complexity can lead to a breakdown of computation as in the halting problem in computer science, implying an inability of the system to set prices, which was exactly what happened in the crash. I was the discussant, and while I had some technical complaints, I find this a very intriguing argument, and it generated considerable and very lively discussion in the session.

What is the Fed up to Now?

Recently I read that the Financial Services Regulatory Relief Act of 2006 will give the Federal Reserve, for the first time, explicit authority to pay interest on reserve balances, beginning on October 1, 2011. [1] I wondered why this change was being introduced.

A clue came yesterday when I read that, at present, THE FED IS UNINTENDEDLY INCREASING BANK RESERVES by its lowering of long-term interest rates and directly supplying credit to borrowers who can’t get money elsewhere. The excess bank reserves created by this process are claimed not to be a spur on credit growth and inflation because “bank lending is constrained by customer demand and by capital [and] right now loan demand is moribund (in spite of a zero federal funds rate) and capital is in short supply.” The Fed wants to drain the ‘tsunami’ of excess reserves caused by its above intervention so that it can regain its capacity to set the Fed Funds rate.[2] It will want to raise the Fed Funds rate eventually and the author of this article hopes they won’t do this anytime in the near future.

However, according to Mark A Sadowski the Federal Reserve -for the first time in history– is already paying the banks interest on excess reserves [ER]. They can earn 0.25% “absolutely risk free on nearly $1 trillion.” This is more than the banks can earn on 1, 3 or 6 month T-Bills right now. “It is a highly deflationary policy that has sharply reduced the money multiplier and has probably rendered the current quantitative easing largely impotent…The IOER appears to be a tool to help prop up the financial sector while keeping long-run inflation expectations low…It is a tragic deflationary mistake.” [3]

It looks like banking has become an unviable business these days. With claims that there are insufficient borrowers at a time when real interest rates are negative [4]. The banks, in any case, don't generally want to lend because most of their customers are insolvent. The solution, therefore is to pay the banks money for doing absolutely nothing.

There is no broadly accepted modern definition of feudalism nor is there one for this more recent emergence of absolute financial nobility [5]. Therein lies our challenge. To find a more apt description for our new lords.

In the absence of any public control over events, self knowledge will at least give us a little power.

[1] Divorcing Money from Monetary Policy
Todd Keister, Antoine Martin, and James McAndrews
http://www.ny.frb.org/research/EPR/08v14n2/0809keis.pdf

[2] The truth about all those excess reserves
Dec 30th 2009, 19:27 by The Economist | WASHINGTON
http://www.economist.com/blogs/freeexchange/2009/12/the_truth_about_all_those_exce

[3] Mark A. Sadowski commenting on Dec 31st 2009 3:50 GMT at:
The truth about all those excess reserves
Dec 30th 2009, 19:27 by The Economist | WASHINGTON
http://www.economist.com/blogs/freeexchange/2009/12/the_truth_about_all_those_exce

[4] Gold and Real Interest Rates. Mark Berger. 20th November 2009
http://education.wallstreetsurvivor.com/gold-real-interest-rates-negative

[5] It could be easily argued that the financiers have always been part of the 'nobility' all along. This may be the first time in history, though, where all the pretense to banking has been abandoned by this class.