The Vanderbilt Torch

Fed's Fixes Fund Future Failures?

The recent flurry of activity by the Federal Reserve is bold, daring, and unprecedented – but is it good?  After years of gradually increasing the federal funds rate, the Fed has responded to recent recessionary economic indicators by slashing the federal funds rate, lowering the discount rate, and financially backing the purchase of one private financial institution by another.  These actions have stymied markets and kept the “recession” from getting much worse, but we have to ask what effect these expansionary monetary policies will have on future inflation.  Sure, it may help us out now, but what happens when ailing banks expect the fed to bail them out in the future?  What happens if people’s long-term inflation expectations are raised by the Fed’s lending rampage?

Rushdie and the Big Picture

Salman Rushdie walks under the shadow of death every day, and he knows it. This does not make him a saint. This does not make him an intercultural expert. This does not make him a reasonable political advisor. But this does make him an expert on the role of the novel. Other authors may speak about what role the novel occupies, what it’s supposed to do, or what subjects the author should cover, but we tend to pay more credence to a man who has spent nearly a decade in hiding for doing what he preaches – namely, changing the world with his words.

Education: Making Dollars and Sense

Gregory Mankiw has an absolute advantage over many economists.  He’s the Robert M. Beren professor of economics at Harvard University, his published articles have appeared in distinguished academic journals as well as the big newspapers, and his textbooks have sold over 1 million copies and been translated into 20 different languages.  But, as he pointed out in his November lecture at Vanderbilt, his comparative advantage stems from his role as the Chairman of the President's Council of Economic Advisers from 2003-2005.  Many economists have impressive academic credentials, but few can say they’ve been in the front-line discussion of the US government’s economic decisions.