Found 82 article(s) for author 'Martin Feldstein'

Why Is US Inflation So Low?

Why Is US Inflation So Low?. Martin Feldstein, June 28, 2013, Opinion. “Why has quantitative easing coexisted with price stability in the United States? Or, as I often hear, “Why has the Federal Reserve’s printing of so much money not caused higher inflation?” Inflation has certainly been very low. During the past five years, the consumer price index has increased at an annual rate of just 1.5%. The Fed’s preferred measure of inflation – the price index for personal consumption expenditures, excluding food and energy – also rose at a rate of just 1.5%. By contrast, the Fed’s purchases of long-term bonds during this period has been unprecedentedly large…”  Link verified April 3, 2014

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America’s Misplaced Deficit Complacency

America’s Misplaced Deficit Complacency. Martin Feldstein, May 30, 2013, Opinion. “The United States still faces a dangerous fiscal deficit, but one might not know it from the complacency that dominates budget discussions in Washington. Regarded as an urgent problem until recently, the federal deficit is now being placed on the back burner of American politics. The shift in thinking was triggered by the revised deficit forecasts recently published by the Congressional Budget Office, the independent technical agency responsible for advising Congress on budget issues. According to the CBO’s report, the US fiscal deficit will decline from 7% of GDP in 2012 to 4% in 2013. This reduction reflects the cuts in government spending…” Link 

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The Federal Reserve’s Policy Dead End

The Federal Reserve’s Policy Dead End. Martin Feldstein, May 9, 2013, Opinion. “The Federal Reserve recently announced that it will increase or decrease the size of its monthly bond-buying program in response to changing economic conditions. This amounts to a policy of fine-tuning its quantitative-easing program, a puzzling strategy since the evidence suggests that the program has done little to raise economic growth while saddling the Fed with an enormous balance sheet. Quantitative easing, or what the Fed prefers to call long-term asset purchases, is supposed to stimulate the economy by increasing share prices, leading to higher household wealth and therefore to increased consumer spending…” Link verified April 3, 2014

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China’s New Path

China’s New Path. Martin Feldstein, April 29, 2013, Opinion. “The opaque nature of China’s government makes it difficult to see where Chinese economic policy is heading, and thus how the Chinese economy will develop in the years ahead. But the scale of China’s economy and its role in global trade and financial markets compel us to try to understand the intentions of China’s new leadership.  A useful starting point is to examine the key appointments that have been made since President Xi Jinping assumed office. One surprise was the decision to retain Zhou Xiaochuan as Governor of the People’s Bank of China (PBOC). Zhou had come to the end of his term…” Link verified April 3, 2014

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Bond Bubble Breakdown

Bond Bubble Breakdown. Martin Feldstein, April 22, 2013, Opinion. “Near multi-generational low bond yields, driven at least in part by US Federal Reserve asset purchases, have pushed the question of whether or not the bond market is a bubble to Top of Mind. We ask three experts if there is a “bond bubble”: Martin Feldstein (Harvard and NBER) – yes and the Fed is entirely to blame; Francesco Garzarelli (GS rates strategy) – no, but yields look expensive and the market is too complacent about rate hikes; and Paul McCulley (former PIMCO partner) – absolutely not and the Fed has done everything right…” Link verified April 3, 2014

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When Interest Rates Rise

When Interest Rates Rise. Martin Feldstein, March 30, 2013, Opinion. “Long-term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities. When interest rates rise, as they surely will, the bubbles will burst, the prices of those securities will fall, and anyone holding them will be hurt. To the extent that banks and other highly leveraged financial institutions hold them, the bursting bubbles could cause bankruptcies and financial-market breakdown. The very low interest rate on long-term United States Treasury bonds is a clear example of the current mispricing of financial assets…” Link verified April 3, 2014

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It’s time to cap tax deductions

It’s time to cap tax deductions. Martin Feldstein, March 13, 2013, Opinion. “President Obama’s recent meetings with members of Congress have raised hopes that a major fiscal deal will replace the “sequester” and put the federal debt on a healthier long-term path. But the key barrier to such a deal remains the disagreement between Republicans and Democrats about the balance between raising revenue and cutting government spending. Republicans say they are against any further increase in taxes. Democrats, including the president, say that any budget deal must include additional revenue as well as spending cuts. Fortunately, Democrats indicate that they want to raise…” Link verified April 3, 2014

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Two Dollar Fallacies

Two Dollar Fallacies. Martin Feldstein, February 28, 2013, Opinion. “The United States’ current fiscal and monetary policies are unsustainable. The US government’s net debt as a share of GDP has doubled in the past five years, and the ratio is projected to be higher a decade from now, even if the economy has fully recovered and interest rates are in a normal range. An aging US population will cause social benefits to rise rapidly, pushing the debt to more than 100% of GDP and accelerating its rate of increase. Although the Federal Reserve and foreign creditors like China are now financing the increase, their willingness to do so is not unlimited…Link verified April 3, 2014

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A Simple Route to Major Deficit Reduction

A Simple Route to Major Deficit Reduction. Martin Feldstein, February 20, 2013, Opinion. “Putting a cap on tax expenditures—those features of the tax code that are a substitute for direct government spending—can break the current fiscal impasse and prevent the dangerous explosion of the national debt. If a cap is combined with entitlement reforms, the government will also be able to reduce tax rates and increase some spending to accelerate the economic recovery. Republicans and Democrats agree that deficits must be cut and the ratio of federal-government debt to GDP reduced. But Republicans want to reduce the deficit by cutting government spending while Democrats…” Link verified April 3, 2014

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The Wrong Growth Strategy for Japan

The Wrong Growth Strategy for Japan. Martin Feldstein, January 17, 2013, Opinion. “Japan’s new government, led by Prime Minister Shinzo Abe, could be about to shoot itself in the foot. Seeking to boost economic growth, the authorities may soon destroy their one great advantage: the low rate of interest on government debt and private borrowing. If that happens, Japanese conditions will most likely be worse at the end of Abe’s term than they are today. The interest rate on Japan’s ten-year government bonds is now less than 1% – the lowest in the world, despite a very high level of government debt and annual budget deficits. Indeed, Japan’s debt is now roughly 230% of GDP…” Link

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