That's a pet peeve of mine. Everyone knows that the $'s reserve status changes everything — everyone except people who've actually looked into the issue carefully 1/
I still see constant assertions that the US has a unique ability to run persistent trade deficits bc of $'s role. Except many other countries do the same 2/
Here are current account balances as % of GDP for US, UK, Australia 3/
There may be subtle funding advantages from $'s role, and we do get seignorage from all those $100 bills held abroad for dubious purposes. But it's trivial stuff from a macro perspective 4/
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I've been a bit surprised to see some Republicans opposing Biden's plans by claiming that the Trump tax cut for corporations was a big success. I thought they'd gone into hiding given its dismal failure 1/
I mean, we were promised a huge surge in business investment; here's what actually happened 2/
But silly me. The players involved here have a long history of denying plain facts that conflict with their agenda. Remember how Rs responded to the surge in Obamacare enrollments? 3/ newrepublic.com/article/117205…
Still a long way to go, but full employment by early next year — and maybe some temporary overheating — now looking very plausible. Why so different from the sluggish recovery after 2008? 2/
I and others were predicting a V-shaped recovery this time because the pandemic shock, unlike the deleveraging shock of 2008, didn't leave a large overhang of impediments to recovery 3/ bcf.princeton.edu/events/paul-kr…
Having a bit of fun delving into the history of infrastructure spending. Q: how big a deal was the Erie Canal? It cost $7 million, which sounds trivial. 1/
But the US economy was vastly smaller then than it is now, and prices were much lower. This may have been almost 1% of a year's GDP, the equivalent of ~$200 billion today 2/ measuringworth.com/datasets/usgdp…
And this was a state, not a national project. As a share of New York's GDP, it was probably the equivalent of a national project > $1 trillion today 3/
This attack might have a smidgen of credibility if the Trump tax cut had actually caused corporations to bring money back to America and invest more 1/ msn.com/en-gb/news/wor…
As a result, Trump's tax cut was basically a giveaway to stockholders — and foreigners own 40 percent of US equities 3/ taxpolicycenter.org/taxvox/who-own…
Agree with just about everything here. This looks like a solid plan, with almost everything justified; but it should be only part of building back better — the really high-return public investments are probably in people, especially children 1/
Also very much agree that the case for a full pay-for via taxes is weak, given extremely low real interest rates, which are a triple reason to spend: we can afford it, private sector doesn't see high returns, and it means that we need to worry about secular stagnation 2/
Real interest rate over time (using previous 3-year core inflation) 3/
This is preliminary, and probably being floated in part to get reactions. But for what it's worth, it sounds as if the Biden plan will be too deficit-averse 1/ washingtonpost.com/us-policy/2021…
The stimulus from the American Rescue Plan will be largely in the rear-view mirror by the time infrastructure ramps up; we'll probably be back in an environment of weak demand and low interest rates 2/
Under those conditions sustained deficit spending on investment is actually good — which was the case Larry Summers was ably making before he began his crusade against the ARP 3/