Archive for June 17th, 2012

June 17th, 2012

“Targeting the Fed” by John Edward

by DickH

John Edward, a resident of Chelmsford who earned his master’s degree at UMass Lowell and who teaches economics at Bentley University and UMass Lowell, contributes the following column

Federal Reserve Chairman Ben Bernanke is often called the second most powerful person in Washington. Federal Reserve monetary policy has a powerful influence on our economy. The central bank Bernanke leads is pretty good at hitting their policy target.

What if the Fed is aiming its powerful ammunition at the wrong target?

Under Bernanke, and for the first time since it was established in 1913, the Federal Reserve now declares an explicit target for inflation. The target is a 2 percent annual increase.

The Fed is responsible for promoting economic growth while making sure inflation does not get out of control. As described in their Mission Statement, the Federal Reserve Bank has a “dual mandate” to pursue “maximum employment” and “stable prices.”

In my last column I talked about a little-known policy of the Federal Reserve. In this column, I will discuss the Fed’s dual mandate and the policy target they shoot for.

The Fed is not very worried about inflation right now. The measure of inflation used by the Fed showed prices increasing by 2.2 percent in 2011. For the 12 months ending in May, the Consumer Price Index was up 1.7 percent. In their most recent policy statement, the Fed said: “The increase in oil and gasoline prices earlier this year is expected to affect inflation only temporarily, and the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.”

Perhaps we would be better off if the Fed worried even less and raised their inflation target to 3 or 4 percent. Alternatively, perhaps they should be targeting something other than inflation. read more »

June 17th, 2012

The Greek election matters to us by Marjorie Arons-Barron

by Tony

The entry below is being cross posted from Marjorie Arons-Barron’s own blog. Check it out.

Forget Romney and Obama for now.  The greatest immediate impact on the U.S. economy, beyond the control of either nominee, could be what happens Sunday in the Greek run-off election.  On that day, millions of Greek voters will choose from among a group of flawed and untrustworthy leaders a party (or coalition of parties) to lead them out of the corrupt, debt-ridden wilderness.  At stake are that country’s solvency, its membership in the Eurozone, the stability of the global economy, and a possible double dip recession for us all.

Jim Barron (yes, we are related) just returned from Athens with what, I must say, is a cogent take on what’s happening there. It’s published today on GlobalPost.com

June 17th, 2012

Niki Tsongas builds bipartisanship one small step at a time by Marjorie Arons-Barron

by Tony

The entry below is being cross posted from Marjorie Arons-Barron’s own blog.

Three-term 5th district Congresswoman Niki Tsongas marches to a slightly different drummer than her colleague Mike Capuano, the subject of yesterday’s blog posting.  Her rhythm is not a march exactly, more a step-by-step piecing together of small scale bipartisan initiatives in an environment in which bipartisanship is an unnatural act.

Tsongas knows that, as one individual,  she can’t make sweeping changes in the tone of the institution.  But from her membership on the House Armed Services Committee, she has learned, despite deep-seated differences between the two parties, to build bi-partisan coalitions. The result she calls “great success.”  She outlined some of those achievements to the New England Council on Wednesday.

The idea that anyone in Congress is experiencing anything that could be called “great success” is stunning on its face.  But, she explains, Armed Services Committee members, away from media glare, have worked across the aisle to improve military body armor, investing in ways to cut the rate of armor-induced skeletal injuries and to develop armor suitable for women in the military and in law enforcement.  On that, she worked with Republican Roscoe Bartlett of Maryland.

With Republican Mike Turner of Ohio she worked on the problem of sexual assault with the military, affecting, she said, one in three women in the military. A new law recognizes the need to provide better training of unit commanders and facilitate the investigation and prosecution of sexual assault cases.

Similarly she reports success on small business issues, helping minority and women small business owners pool their talents to compete for federal contracts.  Here, Tsongas worked with Republican Congresswoman Cynthia Lummis of Wyoming.  Such collaboration is going on very quietly at the member level, the staff level, and the committee level, and, she claims,  ”you can have a lot of impact.”

On the Natural Resources Committee, she worked across the aisle with Republican Chairman Doc Hastings on a land exchange involving the city of Lowell and the federal Historic Park.  The bill got moved out of committee onto the floor and passed the House.  It awaits action in the Senate, where John Kerry has introduced a similar bill.

Tsongas has also worked successfully with New Hampshire Republicans on the reauthorization of the Small Business Investment Research (SBIR) bill , a law that provides R & D money for businesses too small for access to venture capital.  The coalition stayed together to work with the Small Business Administration (SBA) to help influence the rules for implementing the new aspects of the law.

Tsongas hopes some of the same bipartisanship can be achieved when it comes to looming Social Security and Medicare fights.  As did Capuano, she warned against forgetting where our seniors were a generation ago without adequate support for those entitlement programs.  She firmly believes that the federal government still has a role in job creation. She concedes that the debate stems from differences about how much of a role it should have.  But she is optimistic about progress that can be achieved by reaching across the aisle, one member and one issue at a time.

Hers is an interesting take on unusually productive  coexistence in Washington. These are not earth-shattering issues, but they could serve as confidence-building measures for other, more daunting challenges. On the other hand, the cynic in me wonders if her issues may just be too small for the Republican leadership to bother stopping.

Of course, after November, the techtonic plates may well shift:  if there’s a new President, if the Republicans lose seats in the House, if the Senate – where twice as many Democratic seats as Republican are up for reelection – goes Republican.  Any or all of these could bode well or ill for bipartisanship in Washington and the possibility of serious attempts to solve significant national problems.  As for much positive change soon, I’m not holding my breath.

Your comments below are most welcome.

June 17th, 2012

Bunker Hill Day ~ “Don’t fire until you see the whites of their eyes!”

by Marie

 Bunker Hill Monument

From the archives:

MassMoments reminds us that on this day – June 17, 1825 – on the  50th anniversary of the battle the cornerstone was laid for the Bunker Hill Monument in Charlestown, Massachusetts. Daniel Webster, seen by some as the greatest orator in U.S. history was the master of ceremonies. He exhorted American “to make a thriving democracy and a strong union a living memorial to the men who had died there.”

      …in 1825, at the laying of the cornerstone of the Bunker Hill Monument, Daniel Webster addressed a crowd of 100,000, including 190 veterans who had survived the first major battle of the Revolution — an encounter between colonial militiamen and a larger number of better-trained and equipped British Regulars. Eventually the Redcoats prevailed, but half their men were killed or wounded in the process. The militiamen suffered high casualties, too, but they — and people throughout the colonies — took heart from the strong defense they mounted. Fifty years later, “on the ground distinguished by their valor … and the shedding of their blood,” Webster called on Americans to make a thriving democracy and a strong union a living memorial to the men who had died there.

Read the MassMoments article here and read about the Battle of Bunker Hill here at History.com.

Learn even more from the National Park site here: http://www.nps.gov/bost/historyculture/bhm.htm