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Finance

Why Dovish Critics of the Fed's FOMC Statement Are Wrong

Some observers of the Fed were complaining Wednesday that the FOMC statement should have rolled back plans for a mid-2015 rate increase. In their view, reduced rates of inflation observed currently, along with the strong dollar and weak nominal wage growth, should lead the Fed to postpone any rate increases. Such concerns are dead wrong. 

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What Tsipras’s Victory Means for Greece and the EU

It appears that Alexis Tsipras’s Syriza party has won the Greek election, although as of Sunday night, it remains unclear whether he will need to form a coalition government or be able to control parliament on his own. 

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Europe’s Greek Miscalculation

In September 2008, US policymakers were caught flatfooted by the Lehman bankruptcy as they grossly miscalculated the fallout from that event. Today, European policymakers would seem to be making a similar miscalculation in the context of the fast moving Greek developments. First, they seem to be excluding the possibility that Greece could be forced out of the Euro. Second, they seem to be minimizing the cost of a Greek exit to the rest of the European economy were that to occur.

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Ending Swiss Fixed Exchange Rate Is a Welcome Step

Caps on exchange rates are anti-competitive regardless of whether they are imposed in China, a communist country, or Switzerland, a well-known tax haven. Such currency caps attempt to keep a country’s own currency artificially undervalued to boost domestic exports at the expense of making another country’s currency overvalued and exports more costly and unattractive. 

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Ignoring the Yield Curve May Be Dangerous to Your Health

Economists clearly have too much time on their hands. "Fed watcher" is no longer part of the job description now that the Federal Reserve provides guidance on what it plans to do. A reliance on econometric models has taken some of the thought process out of forecasting. And blogging has supplanted the need for real-time economic analysis. So what's an economist to do?

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How The Fed Can Bring About Higher Wages

Last Friday’s employment report provides further evidence of an accelerating economic recovery. More than 250,000 new jobs were created during December. Combined with upward revisions to previous months’ figures, that headline number brought total job gains for 2014 to almost 3 million. Meanwhile, the unemployment rate, which stood at 6.7 percent in December 2013, is now down to 5.6 percent—a sizeable and very welcome decline. 

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As Economic Performance Advances, the Fed Lags Behind

Moving into 2015, the U.S. economy is fundamentally sound. Key factors suggest that the economy is shifting gears toward sustained stronger growth. But the Federal Reserve’s monetary policy is wildly inconsistent with healthy economic growth. 

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Government By 'Guidance' Quashes Economic Freedom and Rule of Law

Freedom is declining in America. The Heritage Foundation-Wall Street Journal Index of Economic Freedom ranks the United States at #12, as does the Fraser Institute’s Economic Freedom of the World Index. The U.S. ranking has slipped in recent years according to both studies and now scores significantly below Hong Kong, Singapore, Chile, Canada, Australia, Switzerland, and New Zealand.

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Three Economic Priorities for 2015

In 2014, the stock market reached record highs, GDP continued to grow, and the unemployment rate declined. The New Year offers many challenges and opportunities for U.S. policymakers to speed economic growth. Here are three priorities to help the economy improve on 2014’s performance. 

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Redistributive Credit Policies Won't Fix Inequality

Mel Watt, Director of the Federal Housing Finance Agency, recently announced that he will reduce the minimum mortgage down payment requirement for Fannie Mae and Freddie Mac – the housing financing behemoths that he controls as their conservator since the financial crisis – to three percent. 

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