Economics has been particularly proud of its record in explaining the central negative event of economic history since the industrial revolution, the Great Depression of the 1930s. Its inquiries into monetary policy, the gold standard, and "regime uncertainty" (its own term) have explained the event with dedication. Economics almost always ...

When we were composing our history of the income tax, Taxes Have Consequences, we kept finding evidence of corporate art purchases from the 1950s through the 1970s. Office parks and towers employing thousands were full of art, much of it modernist, the new style. Then in the 1990s, corporations sold off all the stuff, rocking the ...

"I've had enough of what they call shrinkflation," President Biden said during the Super Bowl in February. Who are you calling "they"? The new packet calculators of the 1970s had shrinkflation, not stagflation, to tabulate.getty In 2007, it was–I actually remember the moment I pounded out the term "shrinkflation," in the manuscript of my ...

What are you doing New Year's Eve? In 1974, it was buy gold for the first time in forty-one years. On December 31, 1974, the federal government once again permitted Americans to own gold. From May 1933, until that New Year's Eve, the feds prohibited Americans from owning gold. In April 1933, President Franklin D. Roosevelt gave Americans one ...

The first of the famous taxes of the past were the awesome depreciation taxes that the company had to pay in the era of high inflation in the 1970s. Steel would buy pricey heavy equipment and then get to deduct it, against a 48 percent corporate profits rate, over many years in nominal dollars, even though inflation was 8-10 percent per year. ...

Ever since the federal government permitted the American people to own gold again in 1974, the gold price has been a remarkable barometer of the economy and investment prospects. In the latter 1970s, gold shot up like a rocket. An ounce went for $175, then $400, then peaking over $800 in 1980. This was as stagflation first menaced the economy ...

Remember phone books? No tome was larger. The pages were about double the normal 8½ by 11-inch size. One for a big metro like Detroit or Philadelphia might run a thousand pages. You could stand on one to reach things high up on a shelf, they were so broad and thick. They could not quite stop a door. Their pages were light. This was of ...

The Texas Miracle–a state now with 30 million inhabitants, putting the heat on California as the greatest place people have ever flocked to in pursuit of the American Dream. For years, Texas has been the picture of mass prosperity. Homeownership within everyone's grasp (and a stellar housing stock). Jobs galore. Entrepreneurial ...

In one central realm, however, Carter set up the phenomenal repudiation of stagflation, the great disinflationary boom of the 1980s and 1990s, that began soon after he left office. Carter was surely the greatest deregulator of any president, Reagan included. Carter brought zeal to his causes, and one of them was deregulation. He unlocked ...

The new audiobook of our Taxes Have Consequences sure has come in handy. We needed a reader with savoir-faire. We got one in the maître of the genre Rick Adamson. Finally I know how to pronounce the stuff we wrote. The book is a history of the income tax. As some of you may know, high earners faced nosebleed rates in the 1950s, 91 percent at ...

In a Tax Notes review of our Taxes Have Consequences: An Income Tax History of the United States, tax history project director Joseph Thorndike writes that the book is a history of income tax rates, not the income tax itself. Income tax rates are not the income tax? The rate schedule does not apply? How scandalous. "The income tax provisions ...

Ohio like Michigan adopted a state income tax about fifty years ago, in 1971. In so doing it sealed its fate as a charter member of the Rust Belt. As I've been writing lately, the states that in the 1960s and the 1970s added an income tax, including every one from New Jersey across to Illinois, turned out to be precisely coextensive with the ...

In our new book Taxes Have Consequences: An Income Tax History of the United States, my co-authors Arthur Laffer, Jeanne Sinquefield, and I devote two chapters to the states and their imposition of new types of taxes, particularly income taxes, in the twentieth century. The first big wave came in the 1930s, as states tried to bail out ...

Inflation of some 8.5 percent is now the highest the United States has seen in 40 years–since the last burst of the Great Inflation of the 1970s and 1980s. That was when inflation was regularly 8.5 percent, when not well into the double digits, including in 1974 and in three consecutive years, 1979-81. Today we hear that central bankers ...

We're officially here. Growth is negative and inflation is at 9 percent. It's 1974 all over again. In that year, all twelve months were spent in recession (one that lasted a year and a third) as prices rose at a double-digit rate. Out of obscure British usage a term became idiomatic in America: stagflation. It was not supposed to have ...

Roughly for most of history, the world's money has been on some sort of precious-metal standard. Gold and silver coins or currency or credit instruments redeemable in gold or silver–this accounts for the lion's share of world monetary history, call it 5,000 years. There were exceptions and flouters in many instances, etc., but the rule ...

Building cranes. How does one put so many in one small place, Nashville, Tennessee? They are ubiquitous there. Nashville is the place I moved to from Houston. Houston, Nashville–why so busy? Because that is where the capital, the investment wants to go. The three richest persons in the United States, Elon Musk, Jeff Bezos, and Bill Gates–they ...

My book on the early career of Arthur Laffer, that advocate of gold within the Nixon administration in 1971, contains the following passage: “A major sociological hegemon, the profession of economics, had produced, or at the minimum been complicit in, the cashiering of remnant classical economic arrangements in favor of techniques of ...

I spent all weekend thinking about Bob Mundell. I had just gotten the hard copy of my own book released several weeks ago, and I was reading it, beginning with the dedication: To Bob Mundell. Robert A. Mundell, the 1999 Nobel Prizewinner in economics and in an easy argument the greatest economist of the last several generations, died yesterday ...

Word that Janet Yellen, the former Federal Reserve chair, will serve as secretary of the treasury in the incoming administration calls on a precedent. The last time this occurred was in a hectic series of events in the summer of 1979. Jimmy Carter was president. Among the hapless moments of the Carter presidency, the "malaise speech" of July ...

This past week, the Senate did not quite confirm President Trump's nominee to the Federal Reserve Board, Judy Shelton. There might be another vote in a few weeks. The opposition to the nomination, mainly from Democrats and cognoscenti in the economics establishment, centers on how wild and out-of-touch are her views in support of a monetary ...

Milton Friedman, that champion of economic freedom, made his mark as a scholar by arguing for a government takeover. Friedman felt that money had to be government-issued and its supply managed well by a central bank. He elaborated these views in the articles and books that brought him to preeminence on the University of Chicago economics ...

But the United States also issues currency, the dollar. It does this to a tremendous degree. It is the world's largest currency issuer, by a longshot. If it is not getting something in exchange for this issuance—thereby wiping out any "budget deficit"—something is very wrong. One does not make something of value in the economy, offer it, and ...

There is a correspondence, in American history, between the nation’s tax and monetary systems. Specifically, when the United States has striven to have an ambitious tax system, it has also striven to nationalize the monetary system. And when the United States has contented itself with a modest system of taxation, it has also seen to it that ...

An article of faith about busts and recessions is that bad times are when the next-generation businesses are born. Teen-retailing phenomenon Altar’d State in 2009, Microsoft and Apple during the 1970s stagflation, Hewlett-Packard in the Great Depression, Carnegie steel in the Panic of 1873. There are plenty of good examples. They give the ...

We’re all supposed to save for a rainy day. The financial shock jocks, from glorious Suze Orman on down, have been intoning to us for years: have six months of living expenses in ready cash! Yet here we are in a harrowing economic stoppage, and it seems that so many of us have close to nil in ready cash, certainly not enough to last ...

“4.” An adage has it is that is how many bear markets one experiences in a lifetime, in a career. Wall Streeters sometime have a sign, “4,” in their offices reminding them of the fact. Let’s check. There is a bear market now, there was one in 2008-09, in 2001-03, and before that either in 1987 (the swift recovery from that one left a long ...

The R-word: recession. Are we heading into one, the first time officially in twelve years? Stocks have been reaching toward bear-market levels, supply-chains are scrambled thanks to the health scare, and people are thinking twice about their routines in work and leisure. National Economic Council Director Larry Kudlow has been the ...

A specter is haunting education in this country: the specter of demographic decline. On or about 2008, that recession year, and continuing through the agonizingly slow recovery, births have gone down by some 750,000 per year. There are about 19.8 million kids in the United States under 5 today, and only a few more from 5 till 10. But in the ...

In the captivating documentary by Steve Forbes, Elizabeth Ames, and company, In Money We Trust, which aired last year on PBS, the producers were kind enough to quote me quoting the great Austrian economist Carl Menger on the definition of money. “Money is that commodity that can readily acquire any other commodity.” “Readily” you say? What, ...

Stocks did great over the departed decade of the 2010s, following up on a decline in the 2000s. It was uncannily like the 1980s and the 1970s. Divide the indexes by 10, and the results were quite identical. The Dow industrials entered the 2010s around 10,000 and ended 2019 at some 28,000. In the 1980s, the start and finish was a little ...

The United States first adopted a permanent income tax in October 1913, months before World War I broke out in Europe. Once the war hit, for the first time since Napoleon a century before, the major trading partners of the United States stopped shipping products into the country for sale. The tariff had long been the principal source of ...

“In History Departments, It’s Up With Capitalism,” ran a New York Times headline in April 2013. The article discussed the sharp increase in scholarship and teaching about the history of capitalism in colleges and universities since the economic and financial crisis of 2008. Simultaneously, the history major in American institutions of ...

Presidential candidate Elizabeth Warren’s economic advisers for her wealth tax, Berkeley economics professors Emmanuel Saez and Gabriel Zucman, have a new book, The Triumph of Injustice, that includes sections on the tax history of the United States. These sections describe the various American tax setups of the past two hundred some years ...

The phenomenal developments in the repurchase markets prompted the Federal Reserve last week to enter those markets. The intermediaries were holding out. If a bank wants cash to cover its short-term settlement needs, ordinarily it stakes “good collateral” (in the Walter Bagehot phrase) and gets a quick loan from an intermediary flush with ...

Of all the figures that inequality doyen Thomas Piketty and collaborator Emmanuel Saez have provided in their vast research in the field of economic disparities, a choice few stand out. Perhaps none is more arresting than the tax rate that the highest earners paid in the era of post-World War II prosperity. That figure, the average tax rate on ...

The resurgence of tariffs as a major component of American fiscal policy is one of the central upshots of the Donald J. Trump presidency. For decades previously, tariffs were a boutique element in the realm of taxation, almost exclusively the province of small-stakes lobbying and Congressional favor-granting. Now tariffs are soaring past ...

The prospect of a Federal Reserve Board nominee in Judy Shelton has led to all sorts of commentary about how kooky the gold standard is. Judy Shelton has said favorable things about gold and the monetary system, and on have come the charges that no serious economist advocates gold, gold limits flexibility in a crisis, gold is not ...

Last month, President Trump gave the Presidential Medal of Freedom to economist Arthur Laffer. Laffer was a hotshot young tenured economist at the University of Chicago in the 1960s, developed supply-side economics in the 1970s, advised President Ronald Reagan in the 1980s, and helped the Trump administration design its tax reform in 2017. But ...

Don Devine, the intrepid head of the civil service during the Reagan administration, Reagan's "terrible swift sword," mentioned something astonishing to me earlier this year. He said that two-thirds of the non-military federal workforce, about 1.3 million persons, are mainly occupied at work in writing checks. The federal government pays ...

China is not a currency manipulator, but along with Malaysia, Germany, and several other studs of the modern world economy, it might be. So says the latest periodic Treasury report, in which the U.S.refrained once again from saying China is a currency manipulator—after all that bluster from back when that this was sure to happen. What's a ...

As tariffs go up against Chinese imports, and as new American trade barriers to the goods of other nations stay up, it is apt to call upon history to see how things worked out when the tariff was the dominant form of taxation. For that it was, in this country, for the first half of our history, from 1789 until 1913, the year the income tax ...

A verity of economic analysis that emerged in the 2008-09 downturn is that what hit was a “financial crisis.” The indication was that the origin and central location of the downturn was in the banking system, as opposed to say industry. Furthermore, because the episode was a financial crisis, the economic damage had to be greater, and the ...

Nostalgia for former Federal Reserve Chair Ben Bernanke’s quantitative easing, “QE,” have we now? Let’s look into where that got us. QE refers to massive buying by our Fed of assets beyond United States government securities. During QE 1, 2, and 3, from 2008-13, the further assets of choice were mortgage-backed securities (MBS). The idea was ...

The announcement that the president will name Stephen Moore to the Federal Reserve Board has drawn the condescension of that sturdy breed, the mainstream economist. Textbook magnate Greg Mankiw, for example. Mankiw urged the Senate not to confirm Moore, much on the basis Moore’s approvingly quoting President Trump that after the tax cut of ...

In the apparent march towards socialism that the nation is undertaking, the point is often made that the young generations, the millennials and "post-millennials" born after 1980, have no memory whatsoever of Soviet Communism or the Cold War. They never got to hear first-hand, on the news, in school, or in the ordinary conversation of family ...

The People's Republic of China is fearless in the face of many things that generally elicit fright and cowering. Islamic terrorism, for example, does little to impress the Chinese leadership. That leadership is content to clamp down on any whiff of Islamic independence movements in its realm's provinces, while implicating the Islamic world ...

Over the last several months, Modern Monetary Theory—MMT—has become the progressive left's latest policy darling, notwithstanding withering criticism from the center (Larry Summers) and the right (from figures too numerous to count). The basic idea of MMT is that the government should finance big, bold spending plans by supplying itself ...

In 1999, syndicated columnist Robert D. Novak noticed that the sky was the limit when it came to singing the praises of the current chair of the Federal Reserve, Alan Greenspan. A book about Greenspan by Novak’s Washington Post colleague Bob Woodward was titled Maestro. Time put him on the cover (with Treasury officials Robert Rubin and ...

That was weird. With exceptions (Martin Feldstein) you could count on a finger, the chorus of opinion about whether the Federal Reserve should raise rates, should “tighten money,” was in the negative. And there the Fed went yesterday and tightened, with a press conference to boot indicating there is probably going to be more of the same. ...

President George H.W. Bush, now laid to rest in College Station, Texas, had a resume, it is often noted. Actually, it was not that long: only ten years in public service before he became vice president. He was a Representative in Congress from 1967-71, then till 1977 ambassador to the United Nations and China and CIA director. Prior to 1967, ...

Last year, the Federal Reserve finally showed some restraint. It raised an interest rate and tied off “quantitative easing,” the big buying of Wall Street’s housing-market paper which former Fed chair Ben Bernanke had been so fond of. The initial results came in a little harrowing. Stocks dived and the hiring of full-time workers across ...

Just over $100 to just about $30. When that happens to a stock, net worth sure is wiped out. Same thing for other investment vehicles, such as commodities? Not at all, actually.
The numbers here are, of course, the price-drop in a barrel of oil over the last two years. Divide by 2.5, and you get pretty close to exactly the metrics of ...

Ben Bernanke’s memoir of the Great Recession, a book called The Courage to Act, is out. In summarizing the book’s argument in an article the other day, Bernanke made several claims of fact that purport to justify his actions as chairman of the Federal Reserve during the crisis years. The claims are not close to ...

The Federal Reserve's annual Jackson Hole retreat last week was a strange exercise. The theme was "inflation dynamics." Yet the Fed's measures of inflation have shown no dynamics, only statics, for years.
Fed Vice Chair Stanley Fischer said the following at Jackson Hole: "Although the economy has continued to recover and the labor market ...

On Friday, I numbered among the twenty-some self-styled conservatives, organized by businessman Steve Lonegan, who gathered at the headquarters of the Federal Reserve to meet with Chair Janet Yellen and governor Lael Brainard. We met for an hour, with a selection of us giving remarks for seven minutes apiece. I was one of those speakers. Here ...

New York Times columnist Paul Krugman wrote the following last month: “Recently the Federal Reserve released transcripts of its monetary policy meetings during the fateful year of 2008….What’s really striking is the extent to which they were obsessed with the wrong thing. The economy was plunging, yet all many people at the Fed wanted to ...

Hurrah for the 50th anniversary of the tax cut championed by JFK, signed by LBJ, to spur growth. Fifty years ago last week, on Feb. 26, 1964, President Lyndon B. Johnson signed into law the sweeping tax cuts that had been championed by his predecessor, John F. Kennedy. The law brought the top marginal income-tax rate down to 70% from 91% and ...