A few things that I noticed around the internet…
-I liked this article by Bob Murphy that examines the economic problems with Obamacare and why we are headed for a single payer and medical rationing down the road.
-Here’s a piece where Scott Sumner responds to the WSJ op-ed by Andrew Huszar from earlier this week. As you’ll recall, Sumner is a fan of NGDP targeting and supports the large-scale QE programs. But when he writes the following…
“Huszar doesn’t seem to realize that financial-market reactions are the best indication of how these programs are working, indeed the only reliable indication. Everything else (such as borrowing costs) is meaningless without a counterfactual.”
…does anyone else see some inconsistencies in logic? I mean, if it’s really about aggregate demand and GDP growth, why have both metrics continued to stall even as the QE programs have gotten larger? In fact, the financial markets have shown little to no correlation with economic realities.
-Moving on to Japan, this Bloomberg article examines how the BOJ has basically overwhelmed the JGB market and that pricing signals have essentially disappeared. For which there are definite consequences:
“’The JGB market is dead with only the BOJ driving bond prices,” said Tetsuya Miura, the chief bond strategist at Tokyo-based Mizuho, one of the 23 primary dealers obliged to bid at government auctions. “These low yields are responsible for the lack of fiscal reform in the face of Japan’s worsening finances. Policy makers think they can keep borrowing without problems.’”
