Category: Economics

False Dawn: FDR and the Great Depression

by philg

False Dawn: The New Deal and the Promise of Recovery, 1933–1947 is an academic economist’s look at all of the academic economists’ explanations for the Great Depression and how, with muscular government intervention led by a now-revered FDR, it could have lasted so much longer than economic downturns that happened in the U.S.’s free market period (1630-1930). (I introduced this book a few months ago with Philip’s Book Club: False Dawn.)

One popular theory is that World War II brought the U.S. out of the Depression after about a decade of failed federal government interventions. The book points out that calculating GNP during World War II is somewhat arbitrary:

But there is a deeper sense in which the wartime recovery, however and whenever it started, was no recovery at all. “In the crucial respect of waste of economic resources,” Broadus Mitchell (1947, 396) observes, “the war was, particularly for the United States, a deepening of the depression.” Tens of millions who had been either unemployed or employed in peacetime activities now took part in activities that, however crucial, continued to reduce instead of enhancing their own and the world’s living standards. To label such a state of affairs “full employment” was, Mitchell says, but “a flattering unction”: the employment thus generated was “for purposes which, by very definition, could have no place in a normal economy.” In short, the war was but a temporary solution to the problem of economic depression, and the more temporary the better. The point may seem trite. But it’s a necessary response to those—and there are many—who declare that World War II ended the Depression and just leave it at that.

… the most serious shortcoming of wartime output measures, namely, their tendency to overstate, perhaps dramatically, both the nominal value of war matériel and the extent to which it should be considered part of national output at all. As Higgs (1992, 45–47) reports, Kuznets, whose wartime and postwar deflators are among those that have been called into question by Friedman and Schwartz and others, had his own grave misgivings about the Commerce Department’s valuation of wartime output. “A major war,” he observed, “magnifies” the usual challenges involved in estimating national income, because war matériel isn’t sold at anything resembling “market” prices and also because wars blur “the distinction between intermediate and final products” (45).

Such considerations persuaded Kuznets to come up with several alternative measures of wartime and postwar GNP, all of which imply a less impressive wartime boom, or no boom at all, and no postwar slump. For example, according to Higgs (1992, 46), “whereas the Commerce Department’s latest estimate of real GNP drops precipitously in 1946 and remains at that low level for the rest of the decade,” Kuznets’s “wartime” estimate “increases in 1946 by about 8 percent, then rises slightly higher during the next three years.” Another Kuznets GNP estimate—what he called “peacetime” GNP—revises the record still further by valuing goods produced for military use at their nonmilitary surplus values only. According to that estimate, between 1945 and 1947 real output rose by almost 18 percent!

The above quote illustrates the principal flaw of the book for a non-academic reader. The author spends most of his ink summarizing and referencing the work of other academics. He’ll lay out four or five theories and deal with each one in turn, forcing the reader to tease out the author’s personal point of view. The book is more accurately characterized as a survey of 100 years of academic thought regarding the Great Depression than as an explanation of the Great Depression and subsequent recovery.

Another popular theory is that the New Deal was an example of Macro Economics 101 Keynesian deficit spending during a downturn. Two chapters are devoted to “The Keynesian Myth”. The author points out that Roosevelt was committed to a balanced budget and that Keynes himself wrote critically of American economic policy. The New Deal was a project to increase the power of the federal government in regulating business, not a deficit spending plan. Some of this project was abandoned when the federal government needed private industry to be its partner for World War II weapons production, but the effect was to stifle business investment and reduce personal consumption.

“Conventional wisdom has it,” Gary Best (1991, 222) observes, “that the massive government spending of World War II finally brought a Keynesian recovery from the depression.” However, Best continues, the fact that the government was no longer at war with business, as it had been during the original New Deal, deserves more credit. “That,” Best says, “and not the emphasis on spending alone, is the lesson that needs to be learned.”

On the extent to which there was any Keynesian borrowing:

New Deal deficits were less impressive than New Deal spending because the Roosevelt administration went to considerable lengths to boost tax revenues and did so even when it meant relying heavily on taxes that mostly burdened low-income Americans. For that reason, the administration chose not only to retain and then repeatedly extend most of the excise taxes imposed as part of Hoover’s 1932 budget—taxes Herbert Stein (1966, 210) considers “the purest act of pre-revolutionary fiscal policy”—but also to increase taxes on gasoline and tobacco, revive the liquor tax upon the repeal of Prohibition, and introduce its AAA tax on food processors. Because they fell on consumers, either directly or indirectly, excise taxes, which eventually funded 60 percent of the government’s “ordinary” revenues (Leff 1984, 147), tended to be deflationary even when fully offset by government spending. Such taxes therefore had little to recommend them from a countercyclical fiscal policy perspective (Brown 1956, 868; Leff 1984, 39). But because excise taxes were revenue workhorses, to an administration not much less determined to limit deficits than Hoover’s had been, they made perfect sense. At the height of the New Deal, Mark Leff (1984, 38) points out, the tax on food processors alone “accounted for one-eighth of total tax revenues,” which was more than the yield from either the personal income tax or the corporate income tax. For this reason, after the tax on food processors was struck down, Roosevelt “continued to suggest processing taxes to balance the budget and to fund farm subsidies” (Leff 1984, 44). What was true of excise taxes was truer still of the Social Security payroll tax that the government began collecting in January 1937. According to Leff (1984, 45), when Roosevelt first came up with his plan for funding Social Security, his advisers warned that because it would draw purchasing power from consumers for the purpose of establishing a $47 billion reserve fund without making any like disbursements from that fund for many years, the plan would be dangerously deflationary. Still, Roosevelt insisted on it, saying that it would assist in balancing the budget while projecting “an image of fiscal responsibility” (47). According to Sherwood Fine (1944, 114), the regressive Social Security tax diverted “more than a billion dollars of purchasing power . . . away from an industrial establishment sensitively attuned to consumer demand” in the midst of a severe economic downturn. “Running along, as we are, on a low level,” Alvin Hansen (1939b, 283) wrote afterward, when various amendments to the Social Security Act were under consideration, “we cannot afford . . . the luxury of a Social Security Program which turns out in effect to be essentially a compulsory savings program, and which thereby seriously curtails the volume of consumption expenditures.”

France was the only significant (imagine that there was a time when France was significant!) foreign nation inspired to follow our example:

France was one of the few countries and the only major one to take longer to recover from the Great Depression than the United States. France was also the only country that resorted to policies closely resembling—indeed inspired by—the New Deal, including NRA-style codes. And it was the only country that did not experience a substantial improvement in output after devaluing its currency. As Barry Eichengreen (1992a, 349) observes, France’s example shows, even more clearly than that of the United States, that “devaluation was necessary but not sufficient for economic recovery.” France’s first stab at New Deal–style industrial planning consisted of the so-called Flandrin experiment, an attempt by the conservative ministry of Pierre-Etienne Flandrin (November 1934–May 1935), directly inspired by the NRA, to cartelize French industries and reduce workers’ working hours. Flandrin’s experiment went no further, and his government fell after six months. But several weeks after decisively winning France’s May 3, 1936, parliamentary election, the Popular Front—an alliance of French radicals, socialists, and communists—implemented an NRA-inspired plan of its own. That plan was so aggressive that recent scholars have dubbed it “a sort of NIRA on steroids” (Cohen-Setton, Hausman, and Wieland 2017). As Barry Eichengreen (1992a, 375–76) explains, “Employers were compelled to sign the Accord de Matignon granting trade union recognition, collective bargaining privileges, and wage increases. . . . [T]he work week was shortened again, but this time without any corresponding reduction in pay. The government legislated an annual paid vacation and a 40-hour week. Wages were raised by 7 percent for high-paid workers and by up to 15 percent for the lower paid. . . . Other elements of the French ‘New Deal’ raised the school-leaving age and nationalized the armaments industry.” The Matignon Agreements’ mandatory wage rate increases went into effect at once, raising nominal labor costs by between 7 and 15 percent (Cohen-Setton, Hausman, and Wieland 2017, 279). The rest of the Popular Front’s plan, including its forty-hour week provision, was phased in industry by industry between then and the end of the year.

Noting how after 1936 France’s industrial output was persistently 30 percent below its long-run trend, Paul Beaudry and Franck Portier (2002) consider various possible explanations, including technological stagnation, only to conclude that the best is the simplest: French output fell 30 percent because between them the Blum government’s labor market legislation and strikes caused total hours worked to fall 25 percent. A decline in the ratio of investment to output, itself traceable to France’s New Deal legislation, accounts for the remaining five percentage points by which output fell.

What did cause the early-1930s collapse, then? The author points to an agriculture boom during World War I that led inevitably to a bust after WWI that dragged down most of America’s banks.

Bank lending to farmers itself doubled between the start of the war and 1920. After the war, both crop prices and US farm exports fell as sharply as they’d risen during it, triggering a farm crisis that was to ruin many farmers over the course of the next decade, often bringing their banks down with them (Belongia and Gilbert 1985). In 1921 alone more than 500 banks failed, topping the previous record established during the Panic of 1893. The 1921 failures coincided with the general economic depression of that year. But while most other industries recovered quickly from the downturn, and did so with little help from either the Federal Reserve or the Treasury, agriculture and banking didn’t. Instead, bank failures mounted.

Although thousands of US banks managed to survive the 1920s, many were in no condition to withstand any further shocks. So when commodity and security prices sagged after the onset of the Depression, bank failures became even more frequent. Rural banks were still the main casualties, although now instead of being concentrated in the western grain-growing states, bank failures were especially frequent in the South and the Midwest, where collapsing cotton, tobacco, and livestock prices combined with reduced cotton and wheat yields—a result of what the Weather Bureau described as “the most severe drought in the climatological history of the United States”—proved to be the last straw (Hamilton 1985, 602).

How much can we rely on expert analysis and wisdom? The author points out that all of the best minds of economics were in agreement that there would be a depression following World War II due to soldiers returning and finding themselves unemployed and the government ceasing purchases of weapons. Business

Full post, including comments

AI economy terminates as petrostate?

by philg

A friend owns a three-unit building in San Francisco (rents carefully controlled by qualified government officials!) and is concerned about the value of his place if AI eliminates most programming jobs. My response was to consider the extreme case that 100 percent of GDP is generated by AI and robots. In that case, the economy becomes like a petrostate, e.g., Kuwait. The efforts of human residents aren’t significant economically compared to oil flowing or NVIDIA chips cogitating. In petrostates, however, the rulers don’t expel most or all of the citizens (like Bhutan did!), but instead use whatever money isn’t stolen by elites to house and feed everyone. Thus, in the typical petrostate, real estate still has substantial value. “Maybe everyone in San Francisco will be on Section 8 and the rent will be paid by the government instead of individuals,” I said, “but you’ll still get rent.”

How will the government get revenue? Petrostates often nationalize the oil industry, as Venezuela did in 1976 and 2007 (Hugo Chavez for the win!). If most of the wealth and income of the U.S. ends up in the hands of the owners of NVIDIA, Anthropic, et al., the government can simply nationalize the top 20 most successful AI-related companies. (We can see a half measure of this right now with Bernie Sanders and Ro Khanna proposing to harvest 5 percent of billionaire wealth every year.)

In other words, it doesn’t make sense to be an AI Doomer on economic grounds because being a citizen of a typical petrostate isn’t terrible (let’s ignore Venezuela for the moment!).

Let’s check in on a petrostate that has been shooting down U.S. fighter jets recently. Kuwait is rich, though not quite as rich per capita as it once was. It looks like they’ve grown the denominator via population growth and, thus, each individual’s share of the oil income has been reduced.

(Note that U.S. politicians, beginning with Lyndon Johnson in the mid-1960s, have been working desperately to grow U.S. population via immigration, exactly the opposite of what makes sense if our destiny is that most wealth comes from something that functions like an oil well.)

Full post, including comments

U.S. economy defies Science

by philg

We’ve been informed that low-skill migrants, as a matter of Scientific fact, are positively correlated with U.S. economic growth (at least aggregate growth if not per-capita!). Low-skill migrants have been departing the U.S. at an unprecedented rate since the Trump Dictatorship v2.0 began (CIS; NYT (covers a different time period than the CIS analysis)).

Toda we learn from the Wall Street Journal that the aggregate GDP is expanding even as the migrant population shrinks.

Maybe the GDP numbers are wrong? We can see for ourselves that valuable Somalis and Latinx are being kidnapped by ICE (should we try to fight ICElamophobia?). We know that these folks are worth $billions even though there is not another country on Planet Earth that is willing to take the migrants whom we deport (i.e., no other country wants to be enriched as we have been). If the GDP data are correct, could the apparent contradiction be explained by The Science being merely a projection of researchers’ love for migrants? “Why immigration research is probably biased” (Guenther, December 20, 2025):

All of these choices resulted in 1,261 submitted models; no two were identical. Notably, this heterogeneity arose even though the hypothesis and data were the same! Think how much freedom researchers have when they are allowed to choose the hypothesis and the data.

It is not necessarily problematic if researchers are more liberal than the general public, but it is problematic if these attitudes make them analyse data in a biased way, to arrive at conclusions that reinforce their prior attitudes. In that case, immigration research ceases to be research and transitions into propaganda, where only hypotheses are tested that one can anticipate to portray immigration positively, and the research design is chosen to obtain the desired conclusion.

Related:

Full post, including comments

Philip’s Book Club: False Dawn

by philg

Maybe some of you will join me in reading False Dawn: The Mirage of Recovery, an economist’s book about the Great Depression, which is when Americans came to accept the idea that every problem should be met by a larger federal government. FDR is almost a god for today’s Democrats (in a debate Ayatollah Mamdani identified FDR as the best modern-day U.S. President and then Florida Realtor of the Year 2020/2021 Andrew Cuomo said FDR would be his pick as well if FDR could be considered “modern”). If nothing else, False Dawn would make an awesome last-minute Christmas gift for anyone with insomnia (384-page work by an economist).

The Wall Street Journal selected this book as one of 2025’s ten best. Some excerpts from their review:

In 1932 Franklin Delano Roosevelt won the presidency with the promise to restore prosperity. But he and his advisers had no clear explanation for the collapse and his subsequent New Deal would amount to a series of experiments. FDR admitted to the nation that some of his proposals took the nation down “a new and untrod path.” If they failed to “produce the hoped-for results, I shall be the first to acknowledge it.”

George Selgin’s “False Dawn” asks if the New Deal’s varied experiments produced the promised recovery. In dispassionate, careful and finally devastating detail, “False Dawn” shows that, with a few exceptions, FDR’s experiments did not work. And he did not acknowledge it.

Based simply on raw numbers, the case for the New Deal is not strong. Although the economy did recover from its nadir when FDR took office in 1933, by 1939 the unemployment rate was still 17%. After six years of supposed recovery, the economy was in worse shape than in any other recession of that century or the following one.

Some might suppose that FDR used deficits rather than the Fed to juice the economy. But deficits as a percent of the economy were hardly different during Roosevelt’s time in office than they had been at the end of Herbert Hoover’s. While the New Deal spent more, it also imposed new taxes on food and payrolls. The result was a bigger federal government, but not one that relied on deficits as stimulus.

If not by increasing the amount of money or deficit spending, how did Roosevelt and his advisors hope to create recovery? The earliest solution they hit on—odd considering the rampant shortages—was to restrict production and thus raise prices. The National Industrial Recovery Act that passed in mid-1933 turned much of the American economy over to giant cartels. Industries colluded to raise prices and unions colluded to raise wages. The result was fewer goods on the market and an immediate economic collapse that would still be remembered today if it hadn’t been surrounded by so many others.

This could be an interesting update to The Forgotten Man, by Amity Shlaes, a Wall Street Journal reporter. I wrote a lot about that book shortly after its 2007 publication (what awesome timing by Schlaes and her publisher, given that the U.S. economy collapsed just a year later):

Full post, including comments

The undocumented have departed, but the number of jobs keeps going up

by philg

In Immigrants expand our economy, but millions of immigrants exiting the U.S. don’t shrink our economy we looked at a New York Times report, “Immigrant Population in U.S. Drops for the First Time in Decades”: “An analysis of census data by the Pew Research Center found that between January and June, the foreign-born population declined by nearly 1.5 million.” (An analysis of January-September data by CIS found a reduction of 2.3 million.)

The Bureau of Labor Statistics says that the “Civilian noninstitutional population” is up by about 2% year-over-year (this is limited to those age 16+, which is why it isn’t the same as the 343 million official Census population estimate) and “Civilian labor force” is up by 1.5%. November news:

The rate of natural increase in the U.S. is only about 0.3% (too small for those who want the Ponzi scheme of infinite growth; excessive for those who care about the environment, traffic congestion, affordable housing, etc.). If the foreign-born population, which has been driving nearly all U.S. population growth, is shrinking, shouldn’t the number of people and the number of people in the labor force be going down or, at most, be flat?

A simple answer would be that the 1.5 million (or 2.3 million) reduction is only among noble undocumented enrichers and that we enjoyed enrichment by 3 million legal immigrants (family reunification, H-1B nonimmigrant immigrants, refugees, asylum-seekers, etc.). But that isn’t consistent with the Pew/NYT report cited above, which says that there has been in a reduction in the number of “foreign-born” residents of all categories. (The more complete CIS study also reports a “foreign-born” reduction.)

Full post, including comments

Open borders don’t lower wages, but sending migrants home will raise wages

by philg

Frontiers of Migranomics from one of our intellectual elites, a New Yorker writer:

We’ve been informed, as a matter of Scientific Fact, that low-skill immigration does not reduce wages for the American working class (contrary to Harvard economists’ analysis). Now the same Scientists are telling us that employers will be forced to pay higher wages, e.g., to apartment cleaners and roofers, if low-skill migrants are sent back to their home countries. More immigrants caused wages to rise (the undocumented built the current American economy) and, also, a reduction in immigrant supply would cause wages to rise.

This reminds me of Immigrants expand our economy, but millions of immigrants exiting the U.S. don’t shrink our economy.

Separately, I’ve refined my Is U.S. immigration policy a form of animal hoarding? post into a more succinct form (without even trying AI!):

The passion for low-skill immigration has the same rational basis as keeping 100 cats in a 2BR apartment: “Animal hoarding is an accumulation of animals that has overwhelmed a person’s ability to provide minimum standards of care. … Rescue hoarders believe they’re the only people that can adequately care for their animals.” The same people who say that the U.S. has a dire shortage of affordable housing and health care then say that the 70 million migrants we’ve welcomed in recent decades aren’t sufficient and we need to bring in more migrants.

My new standard response on X, featuring photos from Unlimited Car Wash in Palm Beach Gardens, Florida, November 21, 2025:

Without 70 million immigrants and their children (another 50 million?) who will hand-wash and vacuum my Rolls-Royce for $21?

In case the Jill Filipovic tweet is memory-holed:

Full post, including comments

Science proves that the U.S. needs immigrant workers; U.S. companies say that they don’t need more workers

by philg

It’s Veterans Day. Historically, one of the things that U.S. society tried to do was ensure that good jobs were available for those who left the military and returned to civilian life. This was a matter of great concern around the end of World War II. See for example “JOBS FOR VETERANS REPORTED FEWER; Full Impact of Discharges Is Yet to Come, Says Commerce Bureau” (New York Times, December 20, 1945):

Veterans are beginning to encounter difficulties in finding employment, with the full impact of discharges upon the labor market yet to be felt, the Department of Commerce said today in this month’s issue of its Survey of Current Business.

With Army surveys showing that at least 75 per cent of the returning veterans would be job-seekers, the article concluded that the country faced a “primary problem” of developing a labor demand sufficient to provide employment for the returning veterans,” along with the additional problem of “finding jobs satisfactory to the veteran with previous training, newly acquired skills and generally high expectations.”

Ever since we opened our borders in 1965 we’ve forced veterans to compete with an ever-larger group of immigrant workers. We’re informed that it is a Scientific fact that an open border enriches every American, including veterans, because immigrant workers are critical to the U.S. economy and there are more than enough jobs to go around. For this post let’s ignore that our immigration policy doesn’t select for immigrants who are able to work; someone who is 2 years old or 85 years old or disabled or completely unskilled has the same entitlement to lifetime residence/citizenship under our asylum-based system or under our family relation-based system as someone who is of working age. Let’s assume that, in fact, immigration does bring in mostly people who are capable of working and who want to work (an irrational desire in a cradle-to-grave welfare state!). Does the assumption that there are ample jobs both for new veterans and new immigrants still make sense?

“More Big Companies Bet They Can Still Grow Without Hiring” (Wall Street Journal, October 26, 2025):

American employers are increasingly making the calculation that they can keep the size of their teams flat—or shrink them through layoffs—without harming their businesses. Part of that thinking is the belief that artificial intelligence will be used to pick up some of the slack and automate more processes. … “If people are getting more productive, you don’t need to hire more people,” Brian Chesky, Airbnb’s chief executive, said in an interview. “I see a lot of companies pre-emptively holding the line, forecasting and hoping that they can have smaller workforces.”

Many companies seem intent on embracing a new, ultralean model of staffing, one where more roles are kept unfilled and hiring is treated as a last resort. At Intuit, every time a job comes open, managers are pushed to justify why they need to backfill it, said Sandeep Aujla, the company’s chief financial officer. The new rigor around hiring helps combat corporate bloat.

“Amazon Plans to Replace More Than Half a Million Jobs With Robots” (New York Times, October 21, 2025):

Over the past two decades, no company has done more to shape the American workplace than Amazon. In its ascent to become the nation’s second-largest employer, it has hired hundreds of thousands of warehouse workers, built an army of contract drivers and pioneered using technology to hire, monitor and manage employees.

Now, interviews and a cache of internal strategy documents viewed by The New York Times reveal that Amazon executives believe the company is on the cusp of its next big workplace shift: replacing more than half a million jobs with robots.

Amazon’s U.S. work force has more than tripled since 2018 to almost 1.2 million. But Amazon’s automation team expects the company can avoid hiring more than 160,000 people in the United States it would otherwise need by 2027. That would save about 30 cents on each item that Amazon picks, packs and delivers to customers.

Executives told Amazon’s board last year that they hoped robotic automation would allow the company to continue to avoid adding to its U.S. work force in the coming years, even though they expect to sell twice as many products by 2033. That would translate to more than 600,000 people whom Amazon didn’t need to hire.

“Amazon to Lay Off Tens of Thousands of Corporate Workers” (WSJ, October 27, 2025):

The latest round of job cuts would be the largest since 2022, when Amazon eliminated around 27,000 roles. That layoff occurred in waves.

The company views the cuts in part as an effort to correct an aggressive hiring period during the pandemic, the people said. During that period, a boom in online shopping led Amazon to double its warehouse network over a two-year period.

Amazon CEO Jassy has sought to find ways for the company to do more with less. In June Jassy sent a note to employees that said increasing use of artificial intelligence will eliminate the need for certain jobs. He called generative AI a once-in-a-lifetime technological change that is already altering how Amazon deals with consumers and other businesses and how it conducts its own operations, including job cuts.

“​​As we roll out more Generative AI and agents, it should change the way our work is done,” he said at the time. “It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce.”

Veterans are above-average in health, intelligence, and education and they come from richer-than-average families. Nonetheless, I wonder if the combination of AI and a continued inrush of legal immigrants (somewhere between 1.2 and 2.6 million annually, according to ChatGPT) will make it almost impossible for tomorrow’s veterans to get decent jobs.

Related: The Bobs.

Full post, including comments

Immigrants expand our economy, but millions of immigrants exiting the U.S. don’t shrink our economy

by philg

Immigration Logic 101 requires us to believe that low-skill immigrants expand the U.S. economy (aggregate GDP growth) and make everyone in the U.S. richer (per-capita GDP growth).

We’re informed that the U.S. economy is growing or, at least, not shrinking.

We’re informed that, apparently contradicting the two items above, that the U.S. is becoming impoverished in immigrants (not as enriched by enrichers). “Immigrant Population in U.S. Drops for the First Time in Decades” (New York Times):

An analysis of census data by the Pew Research Center found that between January and June, the foreign-born population declined by nearly 1.5 million. … experts predict looming negative economic and demographic consequences for the United States if the trend persists. Immigrants are a critical work force in many sectors, and the country’s reliance on them is growing as more baby boomers retire.

Covering a somewhat longer time period and announced with a bit more color, DHS says that 2 million migrants are no longer among us:

If immigration makes us rich how is it possible that de-immigration doesn’t make us poor?

Related:

Full post, including comments

The soybean crisis that has left soybean prices unchanged

by philg

“China’s Snub of U.S. Soybeans Is a Crisis for American Farmers” (New York Times, September 15):

On a windy September morning, Josh and Jordan Gackle huddled to discuss the looming crisis facing their North Dakota soybean farm.

For the first time in the history of their 76-year-old operation, their biggest customer — China — had stopped buying soybeans. Their 2,300-acre soybean farm is projected to lose $400,000 in 2025. Soybeans that would normally be harvested and exported to Asia are now set to pile up in large steel bins.

If we ask the Google for a quick summary of “soybean futures” we get the following chart that shows prices almost exactly where they were on January 1, 2025:

How can there be a “crisis” and at the same time an unchanged price? Is there some other soybean price index that should be considered?

Full post, including comments

Raging inflation despite high interest rates

by philg

Inflation is currently raging at an annual rate of 4.8 percent (up 0.4 percent in the last month times 12) and is 2.9 percent if we look back to August 2024. From the BLS, yesterday:

High interest rates from the Fed haven’t slain the inflation dragon. My posts on this subject:

How eagerly/aggressively is Congress indulging in deficit spending right now? From the Bipartisan Policy Center (a “center” with two or three people in it?):

FY2025 (purple) is one of the most profligate years in U.S. history, but it doesn’t look that profligate because Congress was borrowing/printing money at an even faster rate during coronapanic.

Flash back to January 2, 1957, in which the New York Times praises President Eisenhower for eliminating an astounding and upsetting $4 billion deficit for 1954 (adjusted for the inflation that the government assures us does not exist, this would correspond to a $48 billion deficit in 2025 (compare to the nearly $2 trillion deficit that Congress seems to have built into our economy and government; Eisenhower took strenuous action to eliminate a deficit that was 1/40th the size of today’s deficit)).

Full post, including comments