Why was complaining about loose monetary policy such a prominent feature of the debate? Inflation is low. “Core” inflation — the consumer price index minus volatile food and energy prices — has been under 3 percent since the Bush administration, and is now resting a hair under 2 percent. At this rate of inflation, it would take more than 35 years for prices to double. The dollar is extremely strong against the euro, its major competitor currency, and also strong against the yen, which is the opposite of what you’d expect to see if loose Fed policy were destroying the value of the dollar.
Jeb Bush, a former Lehman Brothers adviser, said the biggest banks now hold less capital and take more risks because of the Dodd-Frank financial reforms; in fact, their Tier One capital levels have doubled from about 6% to 12%, while leverage in the financial system has been cut from about $16 trillion to about $9 trillion.John Kasich, a former Lehman Brothers banker, seemed unaware that FDIC insurance protects ordinary depositors at failing commercial banks.Ben Carson, asked whether the biggest banks should be broken up, said no, but also that they shouldn’t be allowed to “enlarge themselves at the expense of smaller entities,” then added some word salad about low interest rates and 18th-century entrepreneurship and the cost of soap that did not signal deep knowledge about the banking sector.Marco Rubio claimed that new government regulations have increased the size of the biggest banks, when in fact new surcharges for the largest institutions are encouraging megabanks to get smaller.
If Hillary Clinton becomes the 45th U.S. president, it would be the first time since 1948 that the Republicans have lost three consecutive elections. Their “supply-side” orthodoxy would merit much of the blame. Big tax cuts, particularly for the wealthiest, do not work in an age of high inequality and heavy debt. Republicans need an economic agenda that respects markets while also recognizing the challenges facing America and its anxious middle class. …[T]ax cuts look like an answer desperately searching for a problem. Today’s top U.S. marginal tax rate is 39.6 per cent, compared with 70 per cent before the 1981 Reagan tax cuts. The U.S. is almost certainly not an example of the veracity of the Laffer curve, where lowering rates sometimes boosts tax revenue. Nearly half of households pay no federal income tax. And while targeted reform might help U.S. economic dynamism, faster growth seems insufficient for broadly shared prosperity. Middle-class incomes have stagnated as inequality has risen.