A Partisan Nonpartisan Blog: Cutting Through Confusion Since 2012
This should be taken seriously; Bill Dudley was the President of the Federal Reserve Bank of New York (a position in the Federal Reserve System second in importance only to the Chair of the Federal Reserve Board) from 2009–2018).
Note: To explain the new and old approaches to establishing an interest rate, I wrote this post for my students:
In the first half of The Federalist Papers #4 John Jay argues that the states must be prepared to defend themselves from other nations. (See “The Federalist Papers #4 A: The States Must Be Prepared to Defend against Aggression by Other Nations.”) In the second half he argues that they will be better able to defend themselves if they are united. His main arguments are these:
A larger nation has more military leaders to choose from, and so can typically get better leaders.
Coordinated preparations are valuable.
A united front allows for the internalization of externalities between the states in thinking through war aims (as reflected ultimately in the treaties the resolve wars).
A larger nation can have a larger military that it can concentrate at the most important place at any point in a conflict.
Unity of command is valuable.
In a war, states might well betray one another if they are not under one government.
If not united under one government squabbling among the states could make both the prosecution of war and the establishment of peace much more difficult.
The strength that comes from being united matters not only for victory, but also for deterring war.
I consider the second half of The Federalist Papers #4 to being with these two paragraphs pointing to the value of a strong national defense:
The people of America are aware that inducements to war may arise out of these circumstances, as well as from others not so obvious at present, and that whenever such inducements may find fit time and opportunity for operation, pretenses to color and justify them will not be wanting. Wisely, therefore, do they consider union and a good national government as necessary to put and keep them in SUCH A SITUATION as, instead of INVITING war, will tend to repress and discourage it. That situation consists in the best possible state of defense, and necessarily depends on the government, the arms, and the resources of the country.
As the safety of the whole is the interest of the whole, and cannot be provided for without government, either one or more or many, let us inquire whether one good government is not, relative to the object in question, more competent than any other given number whatever.
Then, John Jay lays out in detail the arguments I list above. Here they are, with my summary of the argument in bold before John Jay’s argument in full on that point:
1. A larger nation has more military leaders to choose from, and so can typically get better leaders.
One government can collect and avail itself of the talents and experience of the ablest men, in whatever part of the Union they may be found.
2. Coordinated preparations are valuable.
It can move on uniform principles of policy. It can harmonize, assimilate, and protect the several parts and members, and extend the benefit of its foresight and precautions to each.
3. A united front allows for the internalization of externalities between the states in thinking through war aims (as reflected ultimately in the treaties the resolve wars).
In the formation of treaties, it will regard the interest of the whole, and the particular interests of the parts as connected with that of the whole.
4. A larger nation can have a larger military that it can concentrate at the most important place at any point in a conflict.
It can apply the resources and power of the whole to the defense of any particular part, and that more easily and expeditiously than State governments or separate confederacies can possibly do, for want of concert and unity of system.
5. Unity of command is valuable.
It can place the militia under one plan of discipline, and, by putting their officers in a proper line of subordination to the Chief Magistrate, will, as it were, consolidate them into one corps, and thereby render them more efficient than if divided into thirteen or into three or four distinct independent companies.
What would the militia of Britain be if the English militia obeyed the government of England, if the Scotch militia obeyed the government of Scotland, and if the Welsh militia obeyed the government of Wales? Suppose an invasion; would those three governments (if they agreed at all) be able, with all their respective forces, to operate against the enemy so effectually as the single government of Great Britain would?
We have heard much of the fleets of Britain, and the time may come, if we are wise, when the fleets of America may engage attention. But if one national government, had not so regulated the navigation of Britain as to make it a nursery for seamen--if one national government had not called forth all the national means and materials for forming fleets, their prowess and their thunder would never have been celebrated. Let England have its navigation and fleet--let Scotland have its navigation and fleet--let Wales have its navigation and fleet--let Ireland have its navigation and fleet--let those four of the constituent parts of the British empire be under four independent governments, and it is easy to perceive how soon they would each dwindle into comparative insignificance.
6. In a war, states might well betray one another if they are not under one government.
Apply these facts to our own case. Leave America divided into thirteen or, if you please, into three or four independent governments--what armies could they raise and pay--what fleets could they ever hope to have? If one was attacked, would the others fly to its succor, and spend their blood and money in its defense? Would there be no danger of their being flattered into neutrality by its specious promises, or seduced by a too great fondness for peace to decline hazarding their tranquillity and present safety for the sake of neighbors, of whom perhaps they have been jealous, and whose importance they are content to see diminished? Although such conduct would not be wise, it would, nevertheless, be natural. The history of the states of Greece, and of other countries, abounds with such instances, and it is not improbable that what has so often happened would, under similar circumstances, happen again.
7. If not united under one government squabbling among the states could make both the prosecution of war and the establishment of peace much more difficult.
But admit that they might be willing to help the invaded State or confederacy. How, and when, and in what proportion shall aids of men and money be afforded? Who shall command the allied armies, and from which of them shall he receive his orders? Who shall settle the terms of peace, and in case of disputes what umpire shall decide between them and compel acquiescence? Various difficulties and inconveniences would be inseparable from such a situation; whereas one government, watching over the general and common interests, and combining and directing the powers and resources of the whole, would be free from all these embarrassments, and conduce far more to the safety of the people.
8. The strength that comes from being united matters not only for victory, but also for deterring war.
But whatever may be our situation, whether firmly united under one national government, or split into a number of confederacies, certain it is, that foreign nations will know and view it exactly as it is; and they will act toward us accordingly. If they see that our national government is efficient and well administered, our trade prudently regulated, our militia properly organized and disciplined, our resources and finances discreetly managed, our credit re-established, our people free, contented, and united, they will be much more disposed to cultivate our friendship than provoke our resentment. If, on the other hand, they find us either destitute of an effectual government (each State doing right or wrong, as to its rulers may seem convenient), or split into three or four independent and probably discordant republics or confederacies, one inclining to Britain, another to France, and a third to Spain, and perhaps played off against each other by the three, what a poor, pitiful figure will America make in their eyes! How liable would she become not only to their contempt but to their outrage, and how soon would dear-bought experience proclaim that when a people or family so divide, it never fails to be against themselves.
PUBLIUS.
There is a direct relevance of John Jay’s arguments to our situation today. China is rising in power. It is important for the world to have an adequate counterweight to that power. Allies are valuable, but John Jay’s arguments point out why it is more valuable to have the United States itself be larger and more powerful so it can act as a better counterweight. Here, “larger” doesn’t mean more territory, it means having a larger population that can support a larger total economy and therefore support a larger military if necessary.
Fortunately, the United States can easily become larger in population because many, many people—including many highly skilled people as well as many out of “your tired, your poor, your huddled masses yearning to breathe free” who would gladly serve in the US military in order to be able to become citizens of our fair republic. Unfortunately, in in some quarter, there are low levels of tolerance for the cultural differences of many of those who were born outside the US. I hope that Americans soon wake up to the importance for our national security and world stability of allowing more immigration to the US in order to bolster American power. Of course, assimilation to an important degree is crucial in order to make sure that immigrants do, in fact, bolster American power. But the US has a stellar record of assimilating newcomers and gaining their loyalty. On the value of allowing more immigration in order to keep up with China’s power, see
(There is also a moral dimension to allowing more immigration. On that, see "‘The Hunger Games’ Is Hardly Our Future--It's Already Here” and “The Message of ‘Sal Tlay Ka Siti’.”)
Here are links to my other posts on The Federalist Papers so far:
The "Key Posts" link in navigation at the top of my blog lists all important posts through the end of 2016. Along with "2017's Most Popular Posts" and “2018's Most Popular Posts,” this is intended as a complement to that list. (Also, my most popular storified Twitter discussions are here, and you can see other recent posts by clicking on the Archive link at the top of my blog.) Continuing this tradition, I give links to the most popular posts from 2019 below into six groups: popular new posts in 2019 on diet and health, popular new posts in 2019 on political philosophy, popular new posts in 2019 on other topics, and popular older posts in those three categories. I will put in the 2019 pageviews for each post when someone went specifically to that post.
I am pleased to be able to report 529,822 Google Analytics pageviews in the first half of 2019—over 10,000 pageviews per week. Of these, 38,858 were pageviews for my blog homepage.
New Posts in 2019 on Diet and Health
Kevin D. Hall and Juen Guo: Why it is so Hard to Lose Weight and so Hard to Keep it Off 1,930
David Ludwig: It Takes Time to Adapt to a Lowcarb, Highfat Diet 1,410
Layne Norton Discusses the Stephan Guyenet vs. Gary Taubes Debate (a Debate on Joe Rogan’s Podcast) 1,087
Don't Tar Fasting by those of Normal or High Weight with the Brush of Anorexia 700
After Gastric Bypass Surgery, Insulin Goes Down Before Weight Loss has Time to Happen 426
Eggs May Be a Type of Food You Should Eat Sparingly, But Don't Blame Cholesterol Yet 335
Jonathan Shaw: Could Inflammation Be the Cause of Myriad Chronic Diseases? 291
A Low-Glycemic-Index Vegan Diet as a Moderately-Low-Insulin-Index Diet 281
Mental Retirement: Use It or Lose It—Susann Rohwedder and Robert Willis 270
The Benefits of Fasting are Looking So Clear People Try to Mimic Fasting without Fasting 225
Framingham State Food Study: Lowcarb Diets Make Us Burn More Calories 221
On the Epistemology of Diet and Health: Miles Refuses to `Stay in His Lane’ 196
Crafting Simple, Accurate Messages about Complex Problems 173
Less Than 6 or More than 9 Hours of Sleep Signals a Higher Risk of Heart Attacks 153
Is 10,000 Steps a Day More Than is Necessary for Health? 121
Should Those Whose Main Symptom is Chest Pains Get Stent or Bypass Surgery? 116
Does Reducing Saturated Fat Reduce Cardiovascular Disease? 115
Cancer Cells Love Sugar; That’s How PET Scans for Cancer Work 108
New Posts in 2019 on Political Philosophy
John Locke: How to Resist Tyrants without Causing Anarchy 584
On Despotism 328
The Federalist Papers #1: Alexander Hamilton's Plea for Reasoned Debate 200
John Locke on Monarchs (Or Presidents) Who Destroy a Constitution 159
The Federalist Papers #2 A: John Jay on the Idea of America 111
John Locke: If Rebellion is a Sin, It is a Sin Committed Most Often by Those in Power 97
New Posts in 2019 on Other Topics
In Honor of Alan Krueger 8,801
Adding a Variable Measured with Error to a Regression Only Partially Controls for that Variable 3,559
The Costs of Inflation 2,476
Who Leaves Mormonism? 1,160
Supply and Demand for the Monetary Base: How the Fed Currently Determines Interest Rates 1,016
Ruchir Agarwal and Miles Kimball—Enabling Deep Negative Rates to Fight Recessions: A Guide 813
An Optical Illusion: Nativity Scene or Two T-Rex's Fighting over a Table Saw? 383
Co-Active Coaching as a Tool for Maximizing Utility—Getting Where You Want in Life 312
Measuring Learning Outcomes from Getting an Economics Degree 256
Reza Moghadam Flags 'Enabling Deep Negative Rates to Fight Recessions' in the Financial Times 225
Joshua Goldstein and Staffan Qvist: The Argument for Expanding Nuclear Power 215
Marriage 103 212
Andy Matuschak: Why Books Don't Work (linkpost) 197
Give Central Banks Independence and New Political Pressures to Balance the Old Ones 189
Teens are Too Suspicious for Anything But the Truth about Drugs to Work 167
Andrew Biggs and Miles Kimball Debate Retirement Savings Policy 142
Larry Summers Says the Fed Should Move Fast to Cut Rates 140
Dan Ariely: The Power of Morning, Time Together and Positive Feedback 133
FocusEconomics: Predictions for the Global Economy in 2019 from 13 Experts 117
Ken Rogoff Defends a Robust Negative Rate Policy at Hoover 112
Brian Flaxman—A Tale of Bipartisanship and Financial Interests: The Taxpayer First Act of 2019 109
Silvio Gesell's Plan for Negative Nominal Interest Rates Meets the Mormons 103
FocusEconomics: How and When will the Next Financial Crisis Happen?—26 Experts Weigh In 96
One Nation 96
Older Posts with Continuing Popularity on Diet and Health
Forget Calorie Counting; It's the Insulin Index, Stupid 51,454
How Fasting Can Starve Cancer Cells, While Leaving Normal Cells Unharmed 32,302
Which Nonsugar Sweeteners are OK? An Insulin-Index Perspective 15,533
Why a Low-Insulin-Index Diet Isn't Exactly a 'Lowcarb' Diet 12,731
Using the Glycemic Index as a Supplement to the Insulin Index 7,507
Obesity Is Always and Everywhere an Insulin Phenomenon 5,356
The Case Against Sugar: Stephan Guyenet vs. Gary Taubes 5,306
What Steven Gundry's Book 'The Plant Paradox' Adds to the Principles of a Low-Insulin-Index Diet 4015
Jason Fung's Single Best Weight Loss Tip: Don't Eat All the Time 2,318
The Keto Food Pyramid 1,951
Meat Is Amazingly Nutritious—But Is It Amazingly Nutritious for Cancer Cells, Too? 1,663
Jason Fung: Dietary Fat is Innocent of the Charges Leveled Against It 1,311
Letting Go of Sugar 1,139
My Giant Salad 1,088
Best Health Guide: 10 Surprising Changes When You Quit Sugar 960
The Case Against the Case Against Sugar: Seth Yoder vs. Gary Taubes 508
Is Milk OK? 385
Anthony Komaroff: The Microbiome and Risk for Obesity and Diabetes 316
Heidi Turner, Michael Schwartz and Kristen Domonell on How Bad Sugar Is 134
Carola Binder: The Obesity Code and Economists as General Practitioners 124
Older Posts with Continuing Popularity on Political Philosophy
John Locke: Freedom is Life; Slavery Can Be Justified Only as a Reprieve from Deserved Death 4,398
John Locke on Punishment 2,793
On the Achilles Heel of John Locke's Second Treatise: Slavery and Land Ownership 1,451
John Stuart Mill’s Vigorous Advocacy of Education Vouchers 1,168
Freedom Under Law Means All Are Subject to the Same Laws 1,122
John Locke: The Only Legitimate Power of Governments is to Articulate the Law of Nature 1,121
John Locke's Smackdown of Robert Filmer: Being a Father Doesn't Make Any Man a King 623
John Locke: People Must Not Be Judges in Their Own Cases 584
John Stuart Mill on Balancing Christian Morality with the Wisdom of the Greeks and Romans 500
An Experiment with Equality of Outcome: The Case of Jamestown 431
John Locke: The Right to Enforce the Law of Nature Does Not Depend on Any Social Contract 403
John Stuart Mill on the Protection of "Noble Lies" from Criticism 332
Social Liberty 317
John Stuart Mill’s Brief for the Limits of the Authority of Society over the Individual 282
John Locke: The Law of Nature Requires Maturity to Discern 274
John Locke: Defense against the Black Hats is the Origin of the State 247
John Locke: By Natural Law, Husbands Have No Power Over Their Wives 235
John Stuart Mill on the Sources of Prejudice About What Other People Should Do 192
John Stuart Mill on Being Offended at Other People's Opinions or Private Conduct 169
John Locke Off Base with His Assumption That There Was Plenty of Land at the Time of Acquisition 167
John Stuart Mill on China's Technological Lost Centuries 161
John Stuart Mill's Argument Against Political Correctness 148
John Locke: Law Is Only Legitimate When It Is Founded on the Law of Nature 142
John Locke: Rivalry in Consumption Makes Private Property Unavoidable 132
John Locke Looks for a Better Way than Believing in the Divine Right of Kings or Power to the Strong 131
If the Justice System Does Not Try to Deliver Justice, We Are in a State of War 113
John Stuart Mill on the Need to Make the Argument for Freedom of Speech 107
Genius Can Only Breathe Freely in an Atmosphere of Freedom 107
John Stuart Mill: Making the Government More Powerful than Necessary is Inimical to Freedom 99
John Locke: Thinking of Mothers and Fathers On a Par Undercuts a Misleading Autocratic Metaphor 96
Older Posts with Continuing Popularity on Other Topics
Monetary vs. Fiscal Policy: Expansionary Monetary Policy Does Not Raise the Budget Deficit 2,067
How and Why to Eliminate the Zero Lower Bound: A Reader’s Guide 1,945
The Medium-Run Natural Interest Rate and the Short-Run Natural Interest Rate 1,806
There's One Key Difference Between Kids Who Excel at Math and Those Who Don't (with Noah Smith) 1,610
The Message of Mormonism for Atheists Who Want to Stay Atheists 1,565
The Logarithmic Harmony of Percent Changes and Growth Rates 1,655
The Shards of My Heart 1,287
Why I Write 1,181
Economics Needs to Tackle All of the Big Questions in the Social Sciences 1,052
The Complete Guide to Getting into an Economics PhD Program 1043
Why Taxes are Bad 1,016
Returns to Scale and Imperfect Competition in Market Equilibrium 862
What is the Effective Lower Bound on Interest Rates Made Of? 845
Netflix as an Example of Clay Christensen's 'Disruptive Innovation' 682
The Most Effective Memory Methods are Difficult—and That's Why They Work 596
Even Central Bankers Need Lessons on the Transmission Mechanism for Negative Interest Rates 565
Godless Religion 539
Michael Weisbach: Posters on Finance Job Rumors Need to Clean Up Their Act, Too 460
Greg Shill: Does the Fed Have the Legal Authority to Buy Equities? 400
Sticky Prices vs. Sticky Wages: A Debate Between Miles Kimball and Matthew Rognlie 341
How Subordinating Paper Currency to Electronic Money Can End Recessions and End Inflation 324
18 Misconceptions about Eliminating the Zero Lower Bound 323
Negative Interest Rate Policy as Conventional Monetary Policy: Full Text 316
The Shape of Production: Charles Cobb's and Paul Douglas's Boon to Economics 304
Rodney Stark on the Status of Women in Early Christianity 299
The Deep Magic of Money and the Deeper Magic of the Supply Side 286
Why I am a Macroeconomist: Increasing Returns and Unemployment 283
The Mormon Church Decides to Treat Gay Marriage as Rebellion on a Par with Polygamy 244
Noah Smith: Why Do Americans Like Jews and Dislike Mormons? 211
Matthew Shapiro, Martha Bailey and Tilman Borgers on the Economics Job Market Rumors Website 208
Silvio Gesell's Plan for Negative Nominal Interest Rates 208
Markus Brunnermeier and Yann Koby's "Reversal Interest Rate" 198
John L. Davidson on Resolving the House Mystery: The Institutional Realities of House Construction 192
Barack Obama: Football as the Best Sports Analogy for Politics 188
One of the Biggest Threats to America's Future Has the Easiest Fix 186
Gather ’round, Children, Here’s How to Heal a Wounded Economy 174
How and Why to Expand the Nonprofit Sector as a Partial Alternative to Government: A Reader’s Guide 169
Marriage 101 165
Marriage 102 162
Optimal Monetary Policy: Could the Next Big Idea Come from the Blogosphere? 159
Clay Christensen, Jerome Grossman and Jason Hwang on the Three Basic Types of Business Models 159
Let's Set Half a Percent as the Standard for Statistical Significance 156
Miles's April 9, 2006 Unitarian Universalist Sermon: ‘UU Visions’ 156
My Dad 150
Owen Nie: Monetary Policy in Colonial New York, New Jersey and Delaware 148
The Coming Transformation of Education: Degrees Won’t Matter Anymore, Skills Will 146
Leveling Up: Making the Transition from Poor Country to Rich Country 145
How Conservative Mormon America Avoided the Fate of Conservative White America 143
So What If We Don't Change at All…and Something Magical Just Happens? 121
Responding to Joseph Stiglitz on Negative Interest Rates 116
When the Output Gap is Zero, But Inflation is Below Target 112
A Conversation with Clint Folsom, Mayor of Superior, Colorado 112
Eric Weinstein: Genius Is Not the Same Thing as Excellence 110
Roger Farmer and Miles Kimball on the Value of Sovereign Wealth Funds for Economic Stabilization 110
How Increasing Retirement Saving Could Give America More Balanced Trade 108
David Holland on the Mormon Church During the February 3, 2008–January 2, 2018 Monson Administration 108
‘The Hunger Games’ Is Hardly Our Future--It's Already Here 105
Robert Eisler—Stable Money: The Remedy for the Economic World Crisis 104
Why Scott Fullwiler Misses the Point in ‘Why Negative Nominal Interest Rates Miss the Point’ 100
Fields Medal Winner Maryam Mirzakhani's Slow-Cooked Math 100
Christian Kimball on the Fallibility of Mormon Leaders and on Gay Marriage 97
Annie Atherton: I Tried 7 Different Morning Routines — Here’s What Made Me Happiest (direct link) 94
Christian Kimball: Anger [1], Marriage [2], and the Mormon Church [3] 93
which was a response to:
Alex Hutchison asked me on Twitter about the comment by Hall, Guyenet and Leibel shown at the top. My response is in this Twitter thread.
The Central Bank of Sweden, the Riskbank, may be raising its rates prematurely because of an overeagerness to exit negative rates. But key players within the European Central Bank have reaffirmed their belief in the virtues of negative rates in a new European Central Bank Working Paper. The Riksbank’s explanation was scant, but the ECB Working Paper “A Tale of two decades: the ECB’s monetary policy at 20” great detail about the authors’ thinking.
In this post, I’ll only give Wall Street Journal author James Mackintosh’s comments on the ECB Working Paper. Here is his precis of the working paper:
… a group of the most senior monetary-policy staff at the European Central Bank published a long-awaited paper robustly defending negative rates. The eye-catching claim: The benefits for the economy would still outweigh the damage even if rates went twice as negative, to minus 1%.
…
The ECB paper led by Massimo Rostagno, head of the bank’s monetary policy division, insists that negative rates, alongside bond buying, forward guidance and cheap long-term loans to banks, provide multiple benefits.
First, it argues, demonstrating that there is no zero lower bound to rates takes away the fear that central banks are powerless to act when rates hit zero.
Second, negative rates—a charge on commercial bank deposits at the central bank—create a “hot potato” effect. Banks are encouraged to lend out or invest their money to avoid paying the ECB to hold their spare reserves. The banking system as a whole can’t escape the cost of negative rates, since the reserves have to end up back at the ECB in the end. But any individual bank with spare money can hope that if it is used to buy bonds or lent out, the recipient will pay it into an account at a rival, which will then have to take the hit from the ECB.
Third, the research found that cuts to rates when they are negative lower government bond yields more than cuts when they are positive. The biggest effect is on five-year bonds, which heavily affect fixed-rate lending. The explanation is tricky; one possibility that rather undermines the case for negative rates is that investors think things must be really bad for the central bank to try out even deeper negative rates, so expect rates to stay low for a long time. It’s easy for a central bank to cut rates in normal times, so they are usually expected to rebound toward a higher steady state within a few years.
Fourth, the negative rates helped other policies, such as forward guidance and corporate bond purchases, be more effective.
Finally, a model used in the study concludes that banks have made more money with negative rates than they would have if rates hadn’t been cut, and will continue to do so. This seemingly counterintuitive conclusion results because the squeeze on bank margins has been more than offset by rising fees, capital gains and lower provisions for losses than would have been the case.
James Mackintosh also gives a useful list of side effects emphasized by negative rate skeptics. With my numbering added, they are, in his words:
Bank margins are squeezed if they can’t pass on the negative rates to their own depositors;
pension funds and insurers forced by regulators to hold negative-yielding government bonds will find it hard to meet promises to customers; and
the prospect of better-than-free money may encourage financial and housing bubbles.
Let me react to each of these issues.
1. Squeezed bank margins
Squeezed bank margins can be avoided by having the central bank subsidize commercial banks for providing zero rather than negative rates to small household depositors and encouraging them to pass on negative rates commercial and large household depositors. See:
Ben Bernanke: Negative Interest Rates are Better than a Higher Inflation Target
Ruchir Agarwal and Miles Kimball—Enabling Deep Negative Rates to Fight Recessions: A Guide
Other mechanisms for subsidizing banks are also available. For example the ECB loans funds to commercial banks at below-market rates.
2. Low rates for pension funds
Here the problem is the use of mild negative rates for long periods of time rather than deep negative rates for short periods of time. (Of course, this requires modifications to paper currency policy. See “How and Why to Eliminate the Zero Lower Bound: A Reader’s Guide.”) Getting back to robust economic growth quickly with deep negative rates then makes it appropriate for a central bank to raise interest rates quickly as the economy recovers.
Note however that even if a central bank quickly returns an economy to the natural level of output and the long-run natural interest rate, that long-run natural interest rate might be lower than pension funds are used to in past decades. This is beyond a central bank’s control and must be addressed by supply-side policies. See:
3. Financial stability concerns
One of the best methods of combatting financial instability coming from house prices is to allow more residential construction—especially residential construction in desirable cities to live and work in. But this policy is beyond the purview of central banks. Most central banks do, however, have a hand in setting capital (equity) requirements, or at least have an influence on those who do. It is my contention that high enough capital requirements can dramatically reduce dangers from financial instability. That is not to say that interest rate policy should pay no attention to financial instability: rates should be raised when risk premia become unusually small and lowered when risk premia become unusually large. See:
Conclusion
I have met several of the authors of the new ECB Working Paper and found them very impressive. Their paper deserves a closer look.
For annotated links to other posts on negative interest rate policy, see:
At this new beginning, may we look forward to a deeper inkling of the God or Gods Who May Be, and work to strengthen their hand in the world. May we also face the inevitable endings that will come with grace and fortitude. Amen.
For more agnostic prayers, see my post “The Book of Uncommon Prayer”
Some people have the intuition that any food or drink that is pleasurable must be bad for health. I would emphasize instead that it is important to find types of food and drink that are pleasurable enough relative to less healthy alternatives that they can help one stay away from the worst foods in the long run.
In the area of food, I continue to think that—even if saturated fat is less healthy than mono-unsaturated fat like that in avocados, olives, or almonds—sugar is much, much, worse for health than saturated fat. Hence, if adding cream or coconut milk into ones diet helps one stay away from sugar, that seems like a good deal. See what I say in “Does Reducing Saturated Fat Reduce Cardiovascular Disease?”
Turning to drinks, unfortunately, among pleasurable things, there is evidence for harm to health from the most common nonsugar sweeteners and even for alcohol. See
Fortunately, it has been hard for scientists to find serious downsides to caffeine other than the obvious: interfering with sleep, causing jitters and dependence on caffeine to stay awake. Overall, tea and coffee in both their low-caffeine and (with due caution) their high-caffeine forms are relatively healthy alternatives.
In my view and in my own personal practice, flavored sparkling water is a great way to add variety to add variety to tea, coffee, and straight water or unflavored sparkling water.
When buying flavored sparkling water, it is important to verify from the ingredient list that it contains only carbonated water and flavor essences. That still leaves many brands and many flavors within brands of flavored sparkling water.
Even for the wary, worried about harms someone might be able to find in the future from flavored sparkling water (for example, from the BPA that is commonly used for cans of all sorts), I’ll bet those harms are much smaller than all the other drinks flavored sparkling water helps one be willing to avoid:
Fruit juice is laden with sugar and has a much worse insulin kick than whole fruit. (See
The most common nonsugar sweeteners have an insulin kick (which will make you feel hungry) and sweetness itself can make you hungry. (See “Which Nonsugar Sweeteners are OK? An Insulin-Index Perspective.”)
Alcohol has pluses to put against its minuses, but those pluses are not pluses for health. (“Data on Asian Genes that Discourage Alcohol Consumption Explode the Myth that a Little Alcohol is Good for your Health.”) Interestingly, despite talk of “beer bellies,” the health harms of alcohol do not stem from spiking insulin. (“Forget Calorie Counting; It's the Insulin Index, Stupid.”) They work through other pathways.
Milk raises various complex issues in relation to health. (See “'Is Milk Ok?' Revisited.”)
On plant-based milk, I think of almond milk as being OK, although I count drinking any significant amount of almond milk as breaking a fast. There are some other nut milks that are probably just as healthy as almond milk, such as hazelnut milk, but they are hard to find or expensive. Coconut milk has saturated fat, which might be fine, but according to some people is bad. Oat milk may be OK except for a general worry about about grains that I get from reading Steven Gundry. (See “What Steven Gundry's Book 'The Plant Paradox' Adds to the Principles of a Low-Insulin-Index Diet”) Other plant-based milk have seemed to me to have one problem or other. Influenced by Steven Gundry, I avoid cashews because they are a new-world food and not true nuts. (See “Our Delusions about 'Healthy' Snacks—Nuts to That!”) Many people worry about soy. Peas are high in easily digested carbohydrates, so pea milk might be as well.
Given how healthy flavored sparkling water is, I am heartened to see the dramatic growth in sales of flavored sparkling water. (See the Wall Street Journal graph at the top of this post.) Let me report that many flavors are truly delicious. To someone like me, whose taste buds have adjusted to being off of sugar, they taste quite sweet even though they have no sweetener in them.
For those who are new to flavored sparkling water, let me showcase my favorite flavors. (By and large, my family agrees with me on these favorites. I’ll note the few exceptions.)
Coconut La Croix has many fans: see this Twitter thread. The comparison to cream soda helped me appreciate this flavor. It deserves its place among my favorites.
Not everyone in my family likes Cucumber Mint, but I find it refreshing, especially when I am thirsty:
Opinions in my family also differ about Lemon, but I like it.
Bubly is a less expensive brand. The Peach Bubly is a decent flavor, and it has many flavors that only modestly worse substitutes for the corresponding La Croix or Good & Gather flavors.
For me one great boon of flavored sparkling water is that the acidity of even citrus flavors is low enough that I OK despite sensitive teeth that make me have to avoid citrus in other forms. Also, as near as I can tell, they don’t have food colors in them, which reduces my worry about stains if I spill.
One of the difficulties of nutrition research is that both natural and experimental variation often involve replacing one type of food or drink with another, meaning that one is looking at the combined effect of eating or drinking one thing and not eating or drinking another thing. Switching to flavored sparkling water from many, many other drinks is bound to be a big improvement. Switching to flavored sparkling water from straight water or unflavored sparkling water is likely to be a small worsening, in itself. But I also find that flavored sparkling water makes it more pleasant to fast—to not eat for a period of time. And fasting has large health benefits.
For annotated links to other posts on diet and health, see:
In The Federalist Papers #3, John Jay argues that, united, the states are less likely to start or give just cause for a war. (See The Federalist Papers #3: United, the 13 States are Less Likely to Stumble into War.) In The Federalist Papers #4, John Jay argues that, united, the states will be better able to fend off unjust aggression. The first half argues that unjust aggression is a genuine danger:
“… it need not be observed that there are PRETENDED as well as just causes of war. … nations in general will make war whenever they have a prospect of getting anything by it; …”
The relevance of this observation is backed up by these arguments:
Monarchs can have narrowly selfish reasons to start a war.
Nations can be tempted to use a war to gain advantage in a commercial rivalry. For example:
Fishing
Shipping
Nations may view the preservation of monopolies and exclusive commercial rights as a matter of national interest and may not see the justice of the freer trade American merchants would like. For example,
Trade with India and China
Trade along the Mississippi River
Trade with Canada
Here is how John Jay makes this argument in detail:
The Same Subject Continued: Concerning Dangers From Foreign Force and Influence
For the Independent Journal.
Author: John Jay
To the People of the State of New York:
MY LAST paper assigned several reasons why the safety of the people would be best secured by union against the danger it may be exposed to by JUST causes of war given to other nations; and those reasons show that such causes would not only be more rarely given, but would also be more easily accommodated, by a national government than either by the State governments or the proposed little confederacies.
But the safety of the people of America against dangers from FOREIGN force depends not only on their forbearing to give JUST causes of war to other nations, but also on their placing and continuing themselves in such a situation as not to INVITE hostility or insult; for it need not be observed that there are PRETENDED as well as just causes of war.
It is too true, however disgraceful it may be to human nature, that nations in general will make war whenever they have a prospect of getting anything by it; nay, absolute monarchs will often make war when their nations are to get nothing by it, but for the purposes and objects merely personal, such as thirst for military glory, revenge for personal affronts, ambition, or private compacts to aggrandize or support their particular families or partisans. These and a variety of other motives, which affect only the mind of the sovereign, often lead him to engage in wars not sanctified by justice or the voice and interests of his people. But, independent of these inducements to war, which are more prevalent in absolute monarchies, but which well deserve our attention, there are others which affect nations as often as kings; and some of them will on examination be found to grow out of our relative situation and circumstances.
With France and with Britain we are rivals in the fisheries, and can supply their markets cheaper than they can themselves, notwithstanding any efforts to prevent it by bounties on their own or duties on foreign fish.
With them and with most other European nations we are rivals in navigation and the carrying trade; and we shall deceive ourselves if we suppose that any of them will rejoice to see it flourish; for, as our carrying trade cannot increase without in some degree diminishing theirs, it is more their interest, and will be more their policy, to restrain than to promote it.
In the trade to China and India, we interfere with more than one nation, inasmuch as it enables us to partake in advantages which they had in a manner monopolized, and as we thereby supply ourselves with commodities which we used to purchase from them.
The extension of our own commerce in our own vessels cannot give pleasure to any nations who possess territories on or near this continent, because the cheapness and excellence of our productions, added to the circumstance of vicinity, and the enterprise and address of our merchants and navigators, will give us a greater share in the advantages which those territories afford, than consists with the wishes or policy of their respective sovereigns.
Spain thinks it convenient to shut the Mississippi against us on the one side, and Britain excludes us from the Saint Lawrence on the other; nor will either of them permit the other waters which are between them and us to become the means of mutual intercourse and traffic.
From these and such like considerations, which might, if consistent with prudence, be more amplified and detailed, it is easy to see that jealousies and uneasinesses may gradually slide into the minds and cabinets of other nations, and that we are not to expect that they should regard our advancement in union, in power and consequence by land and by sea, with an eye of indifference and composure.
Here are links to my other posts on The Federalist Papers so far:
Take a look at this exchange between Elizabeth Warren and Pete Buttigieg in a recent Democratic Primary debate:
“So, the mayor just recently had a fundraiser that was held in a wine cave, full of crystals, and served $900-a-bottle wine,” she said. “Think about who comes to that.”
“We made the decision many years ago that rich people in smoke-filled rooms would not pick the next president of the United States,” she added. “Billionaires in wine caves should not pick the next president of the United States.”
Buttigieg pushed back, noting (as he has before) that he has the smallest net worth of anyone running. “I’m literally the only person on this stage who is not a millionaire or a billionaire,” he said. By Warren’s logic, Buttigieg continued, Warren herself was part of the problem.
“Now, supposing you went home and felt the holiday spirit—I know this isn’t likely, but stay with me—and decided to go on peteforamerica.com and gave the maximum allowable by law, $2,800,” he said. “Would that pollute my campaign because it came from a wealthy person?”
Elizabeth Warren’s is handicapped in this exchange by two facts. First, inflation over the past century makes it so “millionaire” doesn’t mean as much as it once did—and “multimillionaire” could mean someone who has $2 million, which also doesn’t mean as much as it once did. Second, English is missing convenient, noncompound words for many of the relevant powers of ten. If one thinks that while a million dollars makes one rich, that it takes ten million dollars to make someone filthy rich, talking of ten-millionaires not only lacks punch, it is confusing to those who can’t here the different between ten millionaires and ten-millionaires.
Fortunately, Wikipedia provides articles on many of the key powers of ten that detail names for these powers of ten in other languages that can be pressed into service. (These Wikipedia articles also give many fun facts about numbers in between these powers of ten.) Let me give the Wikipedia links and the relevant passages Wikipedia bolding with my own:
In India, Pakistan and South Asia, one hundred thousand is called a lakh, and is written as 1,00,000. The Thai, Lao, Khmer and Vietnamese languages also have separate words for this number: แสน, ແສນ, សែន [saen] and ức respectively. The Malagasy word is hetsy[1].
In South Asia, it is known as the crore.
In Cyrillic numerals, it is known as the vran (вран - raven).
East Asian languages treat 100,000,000 as a counting unit, significant as the square of a myriad, also a counting unit. In Chinese, Korean, and Japanese respectively it is (simplified Chinese: 亿; traditional Chinese: 億; pinyin: yì) (or Chinese: 萬萬; pinyin: wànwàn in ancient texts), eok (억/億) and oku (億). These languages do not have single words for a thousand to the second, third, fifth power, etc.
(“Million, “billion” and “trillion” are perfectly good words, and in recent years the British usage for “billion” and “trillion” have begun converging toward the American usage. For 10,000, I have always liked the word “myriad.”)
Making some editorial choices, let me then propose the following names, including the traditional ones:
$1,000,000: millionaire
$10,000,000: vranaire
$100,000,000: okuaire
$1,000,000,000: billionaire
$10,000,000,000: lakhlakhaire
$100,000,000,000: hundred-billionaire
$1,000,000,000,000: trillionaire
Notes on roads taken and not taken:
“croraire” would be hard to pronounce; hence I prefer “vranaire.”
I have spent a lot of time in Japan, so I am drawn to the Japanese word for 100,000,000.
Wikipedia gives no single noncompound word for 10,000,000,000. But using “lakh,” it is possible to make a compound term that is only two syllables and is quite distinctive and memorable. (10,000,000,000 = 100,000 x 100,000. Here is a link for the pronunciation of lakh.
I am at a loss to find a noncompound word for 100,000,000,000, but at least “hundred-billionaires” is distinguishable in speech from “one hundred billionaires.”
If you want to know what these various categories of rich folks are like, I highly recommend the book Richistan, by Robert Frank, about what it is like to be very rich. It makes a difference which power of ten one has exceeded! It is very, very different to be an okuaire than to be a vranaire. A vranaire has enough to retire early in comfort and have a nice house in any city, but having almost anything one selfishly desires that money can buy requires being at least an okuaire. And it is not hard to have philanthropic desires or desires for power to affect human history that would easily require being a billionaire or lakhlakhaire.
As for millionaires, a tenured economics professor who has been required by their college or university to save 15% of their salary for retirement should at a certain age be a millionaire on paper unless they have had bad luck.
Related post: New Words for a New Year
In “An Agnostic Grace,” I write:
And we remember Jesus Christ, symbol of all that is good in humankind, and thereby clue to the God or Gods Who May Be.
Christmas, the celebration of Jesus’s birth, is a clue to men’s and women’s desiring. People want:
many, many things that money can buy, as the commercial aspect of Christmas attests;
the thrill of discovery, as the idea of gifts as surprises attests;
good food, as the culinary aspect of Christmas attests;
close, warm relationships with family and friends, as Christmas gatherings with family and friends attest;
not feeling bad about themselves, as the idea that Jesus came to bring forgiveness of sins attests;
not having death undo us all, as the idea that Jesus came to bring victory over death attests.
May we, in this Christmas season, get much of what we want now, and let us make great plans to get more of what we want later.
Don’t miss other Christmas posts:
That Baby Born in Bethlehem Should Inspire Society to Keep Redeeming Itself
An Optical Illusion: Nativity Scene or Two T-Rex's Fighting over a Table Saw?
Also see “The Book of Uncommon Prayer” and my happiness sub-blog.
