(1/N) Following the recent bank failures, a number of economists have raised concerns that we are in a banking crisis. I think this is wrong because losses from interest rates and from credit are regulated very different. There are things to be fixed, but let me explain . . . (2/N) The assets -- loans and securities -- on the balance sheet of the US banking sector have lost something like 10% of value (papers.ssrn.com/sol3/papers.cf…), which is the same order of magnitude as the (initial) equity value of the entire sector. But, mostly this is fine. Why?

(1/N) Finally, this is EXACTLY how to take down crypto, especially environmentally bad proof-of-work currencies. I have taught about this, and surprised it is not a hedge fund strategy. What is the crypto vulnerability? nytimes.com/2021/06/07/us/… (2/N) Money has a unique legal protection: if someone pays you w/ stolen money, you can keep it even if the original owners finds it & asks for it back. This is crucial. Without it, money would not be liquid. You would need to verify that money was not stolen before accepting it.

(1/4) Paraphrasing: Massive deficit spending did not save Japan from secular stagnation but has only left it with massive debts. So isn’t it an example of what not to do? Read 👇

https://twitter.com/johnhcochrane/status/1401598019598897153

When I first started as an economist, I remember Ken West telling me that the biggest question in economics was Japan. At that time, the big question was: why was the 1990 crash followed by a decade of very low growth & interest rates, and why were expansionary policies failing?

(1/N) Thanks to those liking my @BrookingsInst #BPEA discussion, but I need to clarify one point, and I screwed up in the chat so also will be clarifying, explaining, and giving apologies to @profsufi and @AtifRMian below. (2/N) First, clarifying (for @Claudia_Sahm and others) the general point: while providing data for policy guidance mid-crisis is very useful, we should not regard the answers in today’s papers as the definitive answers. Many examples of how our understanding has changed . . .

(1/N)
How bad is the US debt and deficit situation? A Serious Question for Twitter
by
@ProfJAParker
MIT and NBER

Abstract: Debt and deficits are huge and the Fed is hiding funding costs. Is the US already unable to finance itself? (2/N) The current Federal Debt held by public is equivalent to:
+ 10 years of (non-recession) Federal income tax revenue
or
+ $50,000 per person
or
+ $141,000 per household