Statement on the Federal Reserve

 Here is the link. I paste a copy below.

The Federal Reserve’s independence and the public’s perception of that independence are critical for economic performance, including achieving the goals Congress has set for the Federal Reserve of stable prices, maximum employment, and moderate long-term interest rates. The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence. This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly. It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.

SIGNATORIES

Ben S. Bernanke served two terms as Chair of the Board of Governors of the Fed, as well as Chair of the Council of Economic Advisers under President George W. Bush.

Jared Bernstein served as Chair of the Council of Economic Advisers under President Joe Biden.

Jason Furman served as Chair of the Council of Economic Advisers under President Barack Obama.

Timothy F. Geithner served as the 75th Secretary of the Treasury under President Barack Obama, as well as President and Chief Executive Officer of the Federal Reserve Bank of New York.

Alan Greenspan served five terms as Chair of the Board of Governors of the Fed, first appointed by President Ronald Reagan and then reappointed by Presidents George H.W. Bush, Bill Clinton, and George W. Bush. He also was Chair of the Council of Economic Advisers under President Gerald Ford.

Glenn Hubbard served as Chair of the Council of Economic Advisers under President George W. Bush.

Jacob J. Lew served as the 76th Secretary of the Treasury under President Barack Obama.

N. Gregory Mankiw served as Chair of the Council of Economic Advisers under President George W. Bush.

Henry M. Paulson served as the 74th Secretary of the Treasury under President George W. Bush.

Kenneth Rogoff is the Maurits C. Boas Professor of International Economics at Harvard University and former chief economist of the International Monetary Fund.

Christina Romer served as Chair of the Council of Economic Advisers under President Barack Obama.

Robert E. Rubin served as the 70th Secretary of the Treasury under President Bill Clinton, after serving as the first director of the White House National Economic Council.

Janet Yellen served as the 78th Secretary of the Treasury under President Joe Biden, Chair and Vice Chair of the Board of Governors of the Fed, Chair of the Council of Economic Advisers under President Bill Clinton, and President and CEO of the Federal Reserve Bank of San Francisco.

Principles of Economics, 11e

The new edition of my favorite textbook will be available on January 9, ready for spring semester classes.

News from Yoram

My friend Yoram Bauman (known for, among other things, his Ten Principles parody) has some news:

I only lost half my shirt on the stage-play version of Seize The Initiative! (a romantic comedy about democracy, climate action, and sandwiches) so now I’m looking to bet the other half on a movie adaptation. (Alternative title: Carbon Taxes: The Movie!)....Consider attending a table reading on T Dec 16 in person or on Zoom from 6-8pm MT (5-7pm PT, 8-10pm ET). Everyone is welcome to join (see the flyer here), please just sign up on this Google form. You can also read the latest version of the script at the world’s best URL: Yoram-Com.com. Please share this invite with others, especially if you know Woody Harrelson and want to help get him an Oscar for Best Supporting Actor!

I talk with Michael Klein

On the EconoFact podcast.

The economy 50 years from now

 Seven experts opine.

Flier on RFK Jr

Jeffrey Flier, the former dean of Harvard Medical School, says the HHS Secretary must go. I know Jeff, and I can attest that he is no conventional Ivy League liberal. But he believes in science.

Dear Committee Members

Like many who spend their lives in the ivory tower, I enjoy academic satires. That includes Richard Russo's novel Straight Man, the movie Wonder Boys, the TV show The Chair, and many books by David Lodge.

The most recent is Julie Schumacher's Dear Committee Members, written as a series of recommendation letters from an increasingly cantankerous creative writing professor. Highly recommended for those who like this genre. For me, it was a great way to end the summer, as I prepare for my first class on Tuesday.

Josh Barro, Betsey Stevenson, and Yours Truly

 A conversation in The New York Times.

Our Dollar, Your Problem

I just finished Our Dollar, Your Problem by my Harvard colleague Ken Rogoff. It is a great read for econonerds like me, especially for those who lean toward macro rather than micro. Ken wonderfully blends personal anecdotes with wise observations about the evolution of global finance.

Economics Teaching Conference

I will be speaking at a teaching conference to be held in New Orleans on November 5-7, 2025. If you might be interested in attending, click here.

Keep Politics Out of Data

Cecilia Rouse and I opine in the Washington Post.

Paul Krugman and I

...talk with Bianna Golodryga on CNN.

Wimbledon Wisdom

I recently ran across a graduation speech by the tennis great Roger Federer. I especially appreciated this passage:

In the 1,526 singles matches I played in my career, I won almost 80% of those matches... Now, I have a question for all of you... what percentage of the POINTS do you think I won in those matches?

Only 54%.

In other words, even top-ranked tennis players win barely more than half of the points they play.

When you lose every second point, on average, you learn not to dwell on every shot.

You teach yourself to think: OK, I double-faulted. It’s only a point.

OK, I came to the net and I got passed again. It’s only a point.

Even a great shot, an overhead backhand smash that ends up on ESPN’s Top Ten Plays: that, too, is just a point.

Here’s why I am telling you this.

When you’re playing a point, it is the most important thing in the world.

But when it’s behind you, it’s behind you... This mindset is really crucial, because it frees you to fully commit to the next point… and the next one after that… with intensity, clarity and focus.

The truth is, whatever game you play in life... sometimes you’re going to lose. A point, a match, a season, a job... it’s a roller coaster, with many ups and downs.

And it’s natural, when you’re down, to doubt yourself. To feel sorry for yourself.

And by the way, your opponents have self-doubt, too. Don’t ever forget that.

But negative energy is wasted energy.

You want to become a master at overcoming hard moments. That to me is the sign of a champion.

The best in the world are not the best because they win every point... It’s because they know they’ll lose... again and again… and have learned how to deal with it.

The Fiscal Future

At 4:45 pm today, I will be giving the 2025 Martin Feldstein Lecture at the NBER Summer Institute on "The Fiscal Future." I believe you can watch the lecture live at NBER YouTube channel. In any event, I will post the video when it is available.

Or you can read the lecture by clicking here.

Update: The video is here.

Update 2: George Will offers a nice summary.

Update 3: As published in the NBER Reporter.

Amicus Brief in V.O.S. Selections, Inc. v. Trump

 I was happy to join this group of sensible economists.

Today I Learned

"Beginning in the last decade of the 18th century, firewood output increased from about 18% of GDP to just under 30% of GDP in the 1830s."

Source.

My talk at the recent Princeton reunions (Alan Blinder moderates)

Stanley Fischer

The world lost a great man today. Here is Stan's obituary in the New York Times.

Harvard Derangement Syndrome

Fantastic article by Steven Pinker on the situation at Harvard. A tidbit:

And if you’re still skeptical that universities are worth supporting, consider these questions: Do you think that the number of children who die every year from cancer is just about right? Are you content with your current chance of developing Alzheimer’s disease? Do you feel our current understanding of which government policies are effective and which ones are wasteful is perfect? Are you happy with the way the climate is going, given our current energy technology?

I talk with Gerry Baker

 At the Free Expression Podcast.

Harvard faculty put their money where their mouths are

Here.

Do you oppose the Trump tariffs?

 If so, sign here.

I talk with Bianna Golodryga

 On CNN.

A Virtual Teaching Conference

I will be talking at a virtual economics teaching conference on April 11. If you are interested in participating, click here.

Why the dollar is depreciating today

In a previous post, I noted that, other things being equal, trade restrictions strengthen the dollar. A reader asks, why then is the dollar depreciating in the wake of the newly announced Trump tariffs?

The answer, I believe, is that other things are not equal. In particular, the policy has reduced investor confidence in the U.S. economy. That's also why the U.S. stock market is declining relative to stock markets abroad.

The WSJ explains the dollar depreciation as follows:

The dollar’s sharp falls after President Trump’s tariff announcement raises concerns about the risk of a broader confidence crisis, Deutsche Bank’s George Saravelos says in a note. “Developments since the start of the year make us worried about a broader undermining of confidence in the U.S. economic outlook and the medium-term desirability of dollar allocations.” This risks an unwinding of overweight positions in U.S. assets from countries that have exported capital to the U.S. over the past decade.