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it clearly isn't inflated as the college debt issue makes extremely clear.

College debt is one thing, grade school education is another.

What is more, we can compare funds that go to the public school system. The money to those institutions are not inflated. And then divide by the student body.

Okay, but you're drawing false conclusions from these averages.

What is more and this really has to be conceded... there is no correlation between spending and academic achievement.

Nonsense. It's simply not the strongest factor. Other issues like entrenched institutional racism are stronger, but some of those issues are tied to teacher salaries.

In New York for example funding per pupil is about 24 thousand dollars per student throughout the entire state of New York. That means everyone from Manhattan to upstate new york is getting about the same amount of money spent on their kids per pupil.

No, it does not.

I can show you areas with very poor performance that get a lot of money and areas that get very little that have very high performance. And these are not outliers. There is literally no correlation.

You keep saying that, but you don't actually have evidence that there is no correlation. You only have evidence that there are other stronger correlating factors.

Separately, the high cost of shipping is a substantial burden on the Island's productivity. Puerto Rico is in a distinctive situation with respect to the Jones Act because of its status as an island economy. One option could be to seek a temporary exemption from the Jones Act, for instance for five years, in order both to evaluate whether or not these restrictions really are a substantial cause of elevated shipping costs and to allow for assessment of the costs and benefits of a permanent exemption.

That's what a study by the Federal Reserve of NY thinks.

The average outstanding student loan balance per borrower is $23,300. Again, there is substantial heterogeneity in balances of individual borrowers. The median balance of $12,800 is roughly half the average level, which indicates that a small fraction of people have balances significantly higher than the median. About one-quarter of borrowers owe more than $28,000; about 10 percent of borrowers owe more than $54,000. The proportion of borrowers who owe more than $100,000 is 3.1 percent, and 0.45 percent of borrowers, or 167,000 people, owe more than $200,000. The distribution also varies by age group: for example, borrowers between the ages of thirty and thirty-nine have the highest average outstanding student loan balance, at $28,500, followed by borrowers between the ages of forty and forty-nine, whose average outstanding balance is $26,000 (see chart below).

http://libertystreeteconomics....

Here is the earlier ungated version, which claims that in Chile girls do better at math than boys, but this reference says the opposite: that boys do better than girls in math in Chile.

Regardless, if you look at the scatter plots in the report, you can see that while there may be a trend, it is a weak one with a great deal of outliers (like Iran, where supposedly girls do better than boys in math, but clearly not a "progressive society").

If you don't borrow to buy, you are doing it wrong. Borrow $400k for a $400k house, paying $28k in interest, $10k in carrying cost, and charging $3k for rent. Though, I used unfavorable rent, and a high carrying cost, so I'm sure you'll take exception at the rental price. The numbers aren't far off for many places. A $300k house in Anchorage will rent for $2300 per month.

Google says 280K in interest, not 28K @ 3.92% interest over 30 years. Just Google "interest calculator", and Google displays their built-in interest calculator.

If interest rates ever normalize - even go to 5%, interest jumps to 373K - about the price of the house.

The goal with a rental is to break-even cashflow. The market will go up 100% in 7-15 years, and you will make 2-5% above inflation with more "guarantee" than any other investment with those returns.

How much people can borrow determines how much they pay for real estate, for the most part. And there's evidence we're at peak debt now. There are two measures - the absolute amount of debt, and how much people have to pay to service their debt. That second measure, the debt service ratio / financial obligation ratio, put out by the central bank, is paradoxically at historical lows. Credit low interest rates for that I suppose, or it's just flat out inaccurate, as the About link admits it's difficult to measure.

There's also competition with big all cash investors, though they're down to around 36% of purchases at this point, which drives up prices.

You can speculate on a 100% increase in the next 7-15 years, but that's a rearward looking indicator and the central bank and government have already done a tremendous amount of intervention already, between the bailouts and quantitative easing (lowering interest rates plus buying mortgages and government debt with printed money). Will it continue? Who knows, I'd say it's a 50-50 shot, provided the distortions they're introducing (namely that low interest rates spark asset bubbles) don't break something.

Yes, Bush successfully inflated a bubble to make the numbers show the economy was growing.

I'm not sure why you would consider that a good thing.

Oh and the "jobless recovery" was Bush's economic "boom" that you seem to like so much - for example: http://www.newyorkfed.org/research/current_issues/ci9-8/ci9-8.html. Yes Obama managed to do even better on that front!

Curious, I read it. It demonstrated nothing about inflation, in fact it said "I’ll consider the inflation objection at length in my next post".

However, I don't need a Interwebs wacko to tell me that you can dry water and drink it. If you produce money with no actual wealth to back it up, be it old-style gold reserve or economic worth of the issuing country, it will cause inflation the moment it hits the economic system. Of course if you kept the quadrillion-dollar coin under your bed and told no one, it would cause no inflation as no one would know it existed; but if you use to pay the US government's debts, you have more currency around and no wealth to back it up; by simple supply and demand, value of currency will plummet (there is less than a trillion dollar circulating worldwide), i.e. inflation will boom so much it will make Zimbabwe look like Switzerland.

Even if the quadrillion-dollar coin would not start inflation, it would tell the rest of the world that the US are ready to issue fiat currency to pay their debt: that would start a bank run to get rid of their petrodollars (guess what, there is no fiat fuel, and you would not be able to buy much oil with those petrodollars). See the link above, according to the Fed most dollars are outside the US, a lot of them in the coffers of countries that need to buy oil.

What the US need is not "more" or "less" spending, it is more of the right spending and less of the wrong spending. The US have humongous military spending, which is by definition unproductive (in fact, destructive by its very nature, though the destruction is usually externalised to other countries). Yes, the military also finances R&D, but that R&D would be better aimed for the US economy if it were financed by universities or the private sector with governmental financial support, instead of being trickle-down adaptations of military technology.

The US have too low welfare, with insane amounts of poverty rampaging across the country; these people have no opportunity of becoming productive citizens because they never receive appropriate education. The point is not giving the poor food and shelter (which is of course still necessary), but giving their children good public schools that give them an alternative to crime as the best option for gaining wealth.

Also, there is a disproportionate amount of inmates in US jails. US prisons house more inmates than China, not just per capita— in absolute numbers . All these have to be fed, clothed and guarded, and this is expensive. It is way cheaper to institute education programs to make sure they don't recidivate, but then again some politicians would not look though on crime, which seems to be more important than to be smart on crime. Also, several states outsourced jail management to privates, who are paid by the inmate and have thereby no interest in re-educating their inmates (in fact, they do want their customers to come back!). More government, less market here.

AC is not quite correct. Banks are required to have currency reserves, though they can borrow overnight from the Fed in certain circumstances. It's been a long time since AP econ, I can't remember exactly how the required currency reserve and the overnight lending are related, but if I recall correctly, there's a connection.

This was the prevailing ideology leading up to the financial crisis, where drastic deregulation to get government "out of the way" paved the way to disaster.

Funny, and here I thought that the amended Community Reinvestment Act (as amended in 1991 and 1994, and heavily enforced by regulators beginning in 1994) forced banks to relax lending standards to such an extent that they had to find new and exciting (read: untested and dangerous) ways to get said loans off their books. I was under the impression that this began the rapidly snowballing practice of handing out loans to people who weren't the least bit qualified (from a strictly financial perspective) and that it was heavily encouraged by both President Clinton and (far moreso) by President George W. Bush via Housing and Urban Development.

Further, I kinda figured that several years of practically free money flowing from the quasi-government entity known as the Federal Reserve fueled all kinds of terrible investments (like a housing bubble?). And you know, I didn't think it was helpful that a pair of government-sponsored entities (who were under the direction of the US Congress, had the implicit backing of the Full Faith and Credit of the United States, and who've been taken into conservatorship by the US Federal government) kept prices and rates artificially low at great cost to the US taxpayer and who - together - account for about 60% of the US mortgage market. Doesn't that sort of thing usually spawn... a bubble?

Not really sure what led me to believe all of that stuff. Does the narrative even make sense? Congress changes an existing law and the President changes enforcement to pressure those who give mortgages to hand out more loans to the "economically disadvantaged" in their communities in the mid-1990s which causes lenders to put a ton of loans on their books that don't look very good? I mean, I guess the banks and such would already be lending to people who were qualified for loans; there's no reason not to, right? If you're qualified, the bank makes money through the life of the loan, you get a house, and everybody wins, yeah? So I suppose if Congress had to force banks to make a bunch of loans, it'd probably mean that those loans weren't so great. Now from what I know of banks, they've got to answer to the bean counters and stock holders and all sorts of other people who get fussy when the books start looking scary. I guess if that started to happen, "the government made me do it" probably wouldn't cut it for very long. So on the one side, you've got the government pressuring the lenders to create loans they wouldn't normally create, and on the other hand, you've got people who are like "hey, if you go out of business, I lose a lot of money, so don't do that!" After a little while of that and not seeing things get any better, I know I'd be looking for another way out. Which is interesting, because the US government invented a neat way to get loans off your books back in 1970 with what are called "Mortgage-backed securities" (courtesy of Ginnie Mae). More than half the mortgages in the US have been turned into those, (including $3 Trillion worth in 2003 alone in a $12 Trillion total market) so that's pretty neat.

Ok, so the lenders have a good way move the bad loans off their books, and by all accounts, they start doing just that. By 2002, President Bush was

One issue is the large "winnowing out" of STEM majors in college:

Among students who majored in liberal arts, business or other fields, 73% of white students and about 63% of black and Latino students finished their degrees in five years.

Forty-one percent of American students who start off majoring in science, math, engineering or technology fields graduate from those programs within six years.

The question is whether this "winnowing" is due to lack of preparation of the students before college, or simply a non-educational strategy of signaling that the students who "survive" are of high quality, in which case the institution should consider not calling itself a "higher learning" institution but a "better signaling" institution.

Students in general are choosing non-STEM majors. Top US graduating majors are 1) Business 2) Social sciences and history 3) Health professions and related clinical sciences 4) Education 5) Psychology 6) Visual and performing arts.

I feel pretty bad for anyone who took out loans for majors #2 or #6 and think they can pay them back...#5 will have a rough time as well. Education doesn't pay well on day 1, but if you can stick it out for 10 years and sneak a graduate degree you can do OK, depending on your union contract.

One other issue is that while more women than men are now attending college (57% women/43% men), women are even more likely to choose non-STEM majors. In Business, the female/male ratio is nearly 50/50, but in the #2 top major group of Social Sciences, it is 64/36 in favor of women. In #3 Health, it is 76/24. In #4 Education, it is 77/23.

In CS the female/male ratio is 30/70, in Engineering it is 17/83.

Physical sciences are closer to even (47/53) while Math is slightly more female (58/48).

Wait, what? Those are two not even slightly related issues. This is why discussing finance and economics on /. is so frustrating; the sheer depth of ignorance on display mixed with the arrogance of the Java coder with three years experience.

No, just the arrogance of a public-sector economist with 40 years experience (and that's a lot more arrogance than possessed by a Java coder with three years experience).

No less august an economist than William C. Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York labelled(http://www.newyorkfed.org/newsevents/speeches/2009/dud090418.html) the TAF, the TSLF, the PDCF and subsequent QE1 and QE2 as " The Federal Reserve's Liquidity Facilities" specifically designed "to provide liquidity to banks and dealers." The post to which I was responding claimed that "the value [HFTs] provide is that of market liquidity."

If HFTs were actually providing market liquidity the Fed would not have been backed into enacting trillions of dollars to provide market liquidity. The truth is that HFTs cease to function in the absence of market liquidity; HFTs do not create market liquidity, they only exploit the existing market liquidity to siphon profits from investors in to the pockets of traders.

The plot you referenced showed US specific numbers. Don't you think that growing globalization might mean that job creation might be happening outside the US??

Or maybe the fact that China's productivity growth being 3x that of the US might be causing this?

http://www.newyorkfed.org/research/current_issues/ci13-8/ci13-8.html

I was skeptical, but my skepticism was misplaced.

Here's a research article from the NY Fed back in 2002 about how banks even avoid the checking account reserve requirements by using "sweep accounts" overnight:
http://www.newyorkfed.org/research/epr/02v08n1/0205benn/0205benn.html

"In the most common form of sweeping, funds in bank customers' retail checking accounts are shifted overnight into savings accounts exempt from reserve requirements and then returned to customers' checking accounts the next business day. "

Personally, I find the zero reserve banking system to be pretty worrisome. I can't help but think that much of the bank deregulation from that last 30 years has gotten us where we are now.

Right on. There is about $829 billion dollars of U.S. currency in circulation..

some small banks that don't have access to the Fed discount window (free money).

Umm... no.
http://www.newyorkfed.org/aboutthefed/fedpoint/fed18.html
"All depository institutions that maintain transaction accounts or nonpersonal time deposits subject to reserve requirements are entitled to borrow at the discount window. These include commercial banks, thrift institutions, and United States branches and agencies of foreign banks."

I don't argue that financial regulation preferences larger banks. But fortunately it isn't so bad that the smaller banks are priced out of offering attractive consumer products. In fact, smaller banks somehow frequently offer more customer friendly services. The only place I see a real disadvantage in practice is their technology offerings to customers, like immediate check deposit at the ATM, and slick Web features.

Chris Dodd's new proposal (backed by Geithner and the rest of the White House) is that in order for a shareholder to be able to do so, this shareholder must own 5% of the stock of the company at minimum.

Care to provide a citation of this proposal and that it is supported by the White House? There might be some odd claimed justification for it if you are correct. I won't dismiss it out of hand without hearing the sponsor out. It does sound bad. But a quick Google search didn't come up with anything about your alleged proposal.

But 10-30 year T-Bills are around 4-5%, and because the money that the Fed gives out to the banks is at near 0% (and you are right, the discount rate was increased by a quarter of a percentage point about a month ago) it just makes sense to take all of that cash and then buy those long term bonds, hoarding them.

But you can't borrow from the Fed at 0.75% for 10-30 years! The discount window short term.

Everyone has been saying this, but I'll believe it when I see it.

People always say that we are about to enter a recession when it's an election year.

The "lack" of manufacturing in the US is overstated. There may be fewer manufacturing jobs, those still in manufacturing have generally increased in productivity. The manufacturing that has gone overseas is the lower skilled work.

http://www.newyorkfed.org/research/current_issues/ ci12-2/ci12-2.html

I'm not convinced that manufacturing is a panacea for anyone. Right now, it's largely based on consumerism, and "need" for the next big thing or keeping up with the Joneses when it's just not relevant and current behaviors are not sustainable on a global scale.