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Commentary

The daily commentary section provides insights on complex issues in a brief and digestible format. Here you can find analysis of changing economic conditions and original perspectives on how the economy is affecting policy debates.

No Reason to Fear Fed Rate Hikes

Mickey Levy | 10/31/2014

The current five-year old expansion would fare just fine and even be enhanced if the Fed began hiking rates. Normalizing interest rates should be welcomed, not feared by the Fed.

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On Election Day, These Proposals Have No Place On Your Ballot

Diana Furchtgott-Roth | 10/31/2014

From the taxing of sugary drinks to legalizing unfettered gardening, referendum questions are getting absurd.

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Research

e21 spotlights and directly supports new research that's necessary to develop innovative economic policy solutions for the 21st century. This section highlights in-depth research papers from a range of academics, economists and thinkers across the political spectrum, fostering creative nonpartisan policy solutions to pressing economic concerns.

http://www.economics21.org/files/pdf/Goodfriend.pdf

Monetary Policy as a Carry Trade

Marvin Goodfriend | SOMC | October 31, 2014

Quantitative monetary policy at the zero interest bound should be understood as a “bond market carry trade.” Net interest earnings on the front end of the monetary carry trade should be retained—to guard against the central bank having to create reserves (or borrow) to pay interest on reserves or managed liabilities on the back end, and to show that interest expenses are paid for in large part by earnings from the front end. In the United States, the Federal Reserve balance sheet reflects the front end of a carry trade in that by the end of 2014. The Fed has long asserted independent authority to retain net interest income thought necessary as surplus capital against prospective exposures on its balance sheet. The Fed recognizes that the retention of net interest earnings to build up surplus capital incurs no resource cost for the Treasury or taxpayers. Yet, the Fed has chosen not to build up surplus capital against the carry trade exposure and risk on its balance sheet, jeopardizing the operational credibility of monetary policy for price stability.

http://www.economics21.org/files/pdf/McCallum.pdf

Bitcoin Issues

Bennett T. McCallum | SOMC | October 31, 2014

The appearance of the Bitcoin system, which offers a radically new type of asset that is intended to be used not only as an investment but also as a medium of exchange—and whose operation lies entirely outside the domain of the Federal Reserve—is an extremely interesting recent development in the area of monetary institutions. As matters stand now, the quantitative magnitude of Bitcoin is extremely small in comparison with traditional assets. It must be said, nevertheless, that the development of the system reflects an extremely impressive intellectual achievement. 

Morning eBriefs

Each weekday morning, e21 delivers a short email that provides a snap shot of the day's economic news. These eBriefs include e21 exclusive commentaries and the latest market news and updates from Washington.

Multimedia

Why Your Plan Was Cancelled: Health Insurance and the Affordable Care Act

There's a bizarre reason why millions of Americans saw their health plans cancelled in 2013 and, as explained in a new video featuring Robert Graboyes of the Mercatus Center at George Mason University, millions more will lose their plans in years to come. 

Insurance coverage for Americans will remain in permanent turmoil because the Affordable Care Act (ACA) requires that all plans fit within cookie-cutter designs called "metallic tiers." (The tiers—bronze, silver, gold, and platinum—refer to the percentage of medical expenses a particular plan pays.) The video also explains that families may have to switch plans repeatedly because, as circumstances change, a plan that fits within a tier one year may not fit in any tier in a later year.

Please see Dr. Graboyes’ op-ed on this issue (Under Obamacare, Americans Will Continue to Lose Coverage) http://www.usnews.com/opinion/economic-intelligence/2014/09/22/under-obamacare-americans-will-continue-to-lose-coverage

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