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  • Backgrounder posted September 12, 2014 by Curtis S. Dubay, Salim Furth, Ph.D. Understanding Thomas Piketty and His Critics

    Thomas Piketty’s Capital in the Twenty-First Century[1] is a treatise on how wealth inequality evolves in capitalistic economies. It is the most talked-about and most critiqued economics book of 2014 because Piketty’s timing was perfect: He released the English edition when income inequality was being actively debated in the United States. President Barack Obama brought…

  • Commentary posted September 8, 2014 by Diane Katz Export-Import Bank 'benefits' are grossly misrepresented

    Is it possible to eliminate a government subsidy or will the forces of corporate welfare inevitably prevail? That's the essence of the current debate over the Export-Import Bank, the fate of which must be settled by members of Congress upon their return to the Capitol next week. The obscure government agency dubbed “Ex-Im” funnels billions of dollars to foreign firms…

  • Commentary posted September 8, 2014 by Norbert J. Michel, Ph.D. Is the Federal Reserve Running On Empty?

    Politico ran an attention-grabbing headline last week: The Mystery Woman Who Runs Our Economy.  The article itself offered an interesting look at what makes Yellen tick, but the title presupposed way too much. No single person or committee runs our economy, no matter how hard the Federal Open Market Committee tries.  Far from harmless, this notion that someone in…

  • Commentary posted September 8, 2014 by Stephen Moore, Norbert J. Michel, Ph.D. The Fed Can’t Fix the Economy

    A strange thing happened at the Federal Reserve Bank’s summer-end conference in Jackson Hole, Wyo. Usually these are boring affairs, but liberal protesters crashed the party this time, and demanded that the Fed help the poor by holding interest rates close to zero and injecting more dollars into the economy. An exchange between Reggie Rounds of Ferguson, Mo., and Fed…

  • Backgrounder posted September 4, 2014 by Nicolas Loris What Contributes to Gas Prices and Solutions to Help

    Drivers recently received a bit of welcome news when the Energy Information Administration projected that gasoline prices would likely decline throughout the rest of 2014 to around $3.30 per gallon after reaching a high of $4 per gallon in March.[1] For several years, paying more than $3.50 for a gallon of gasoline had been the new normal, and for many drivers that price…

  • Backgrounder posted September 4, 2014 by Curtis S. Dubay Business Inversions: Tax Reform Is the Only Way to Curb Them

    A recent surge of interest in U.S. business inversions—a process whereby an ‌American company merges with a foreign business and moves the combined business’s headquarters to the foreign country—has precipitated calls for Congress to put an end to the practice. The American public and lawmakers are rightfully concerned about businesses moving their headquarters abroad.…

  • Commentary posted August 25, 2014 by Diane Katz Ex-Im Bank little more than corporate welfare

    Congress is debating the fate of the U.S. Export-Import Bank, an obscure government agency that funnels subsidies to foreign firms for the purchase of American exports. Proponents claim the bank aids small business, creates jobs and "levels the playing field" in global trade. In fact, Ex-Im does nothing of the kind, and Americans deserve to know the truth about what is…

  • Commentary posted August 22, 2014 by Norbert J. Michel, Ph.D. Bitcoin Currency: The New Frontier for the CFPB

    The Consumer Financial Protection Bureau (CFPB) has unparalleled powers over nearly every consumer financial product and service.  Given that virtual currencies can serve as a form of electronic money, the CFPB has, predictably, decided to weigh in on this topic. A CFPB statement this week warned people about the dangers of private digital currencies such as Bitcoin,…

  • Commentary posted August 20, 2014 by Norbert J. Michel, Ph.D. Housing finance reform: It’s still about investment guarantees

    The 2010 Dodd-Frank Act was sold as a reform bill that would reduce risk in financial markets, yet it barely touched the single biggest source of that risk: the government-sponsored enterprises Fannie Mae and Freddie Mac. Several GSE reform proposals have since surfaced in Congress, but those that have garnered the most political support still would perpetuate the old…

  • Backgrounder posted August 20, 2014 by Norbert J. Michel, Ph.D. The Fed’s Failure as a Lender of Last Resort: What to Do About It

    It is not obvious that the Fed should be involved in emergency lending, however, since expectations of such lending can increase the likelihood of crises. Arguments in favor of this role often misread history. Instead, history and experience suggest that the Fed’s balance sheet activities should be restricted to the conduct of monetary policy. —Renee Haltom, Research…

  • Issue Brief posted August 19, 2014 by Daren Bakst Reining in the EPA Through the Power of the Purse

    While significant criticism is rightfully directed to the Environmental Protection Agency (EPA) on issues such as greenhouse gas (GHG) regulation, Congress itself is to blame for not reasserting its lawmaking power over an agency that is supposed to be implementing the will of Congress, not the will of the agency. Through the appropriations process, Congress can rein in…

  • Issue Brief posted August 14, 2014 by Norbert J. Michel, Ph.D. Federal Reserve’s Expansion of Repurchase Market Is a Bad Idea

    The Federal Reserve has been expanding a new “test” program it calls the Overnight Reverse Repurchase Facility (ON RRP). This program is a drastic departure from its regular open-market operations and potentially expands the federal financial safety net to the entire money market. Such an expansion increases systemic risk and increases the likelihood of unintended…

  • Backgrounder posted August 14, 2014 by Norbert J. Michel, Ph.D., Stephen Moore Quantitative Easing, The Fed’s Balance Sheet, and Central Bank Insolvency

    More than five years after the 2008 financial crisis, the Federal Reserve’s role is still the subject of much debate. One source of controversy has been the extent to which the Fed allocated credit directly to possibly insolvent institutions. Critics argue that the Fed should have allowed insolvent firms to restructure through bankruptcy and should have provided credit…

  • Issue Brief posted August 11, 2014 by Norbert J. Michel, Ph.D., John L. Ligon Five Guiding Principles for Housing Finance Policy: A Free-Market Vision

    The two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, remain under government conservatorship with the federal government standing behind all of their obligations. Housing finance reform is likely to be addressed during the next congressional session, but it appears the House and the Senate may offer very different reform proposals. Congress…

  • Testimony posted August 7, 2014 by Diane Katz Mismanagement of Export-Import Bank Invites Fraud

    Testimony before the Committee on Oversight and Reform Subcommittee on Economic Growth, Job Creation and Regulatory Affairs United States House of Representatives July 29, 2014 Chairman Jordan, Ranking Member Cartwright, and Members of the Subcommittee, thank you for inviting me to testify this morning. My name is Diane Katz. I am a Research Fellow in Regulatory…