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J. Huston McCulloch Archive

J. Huston McCulloch is professor emeritus of economics and finance at the Ohio State University.
Biography and other publications

Reining in the Fed



The House of Representatives is currently considering a variety of bills intended to reduce the power of the Federal Reserve System. (“House Republicans Resume Efforts to Reduce Fed’s Power,” New York Times, July 11, Business Section.) Under the pretext of fighting high unemployment, the Fed has more than quadrupled its balance sheet since summer...
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Campaign Donations: Freedom of Speech or of the Press?



On Wednesday, the US Supreme Court overruled the $123,000 cap on what any individual may donate to federal candidates over any two-year election cycle, on the grounds that the cap violates First Amendment free-speech rights. Although this ruling leaves the $2600 limit per candidate intact, it is a big step in the right direction....
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The Double Faustian Minimum Wage Bargain of 2007



In an ordinary Faustian bargain, a mortal sells his (or her) soul to an incarnation of the Devil in exchange for worldly power. However, in 2007 an extraordinary double Faustian bargain took place, in which, in effect, Lucifer and Mephistopheles both gave up their own souls, in exchange for the other’s. In 2006, Democrats...
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Krugman: “Why aren’t wages going up?”



In his New York Times column yesterday, Princeton economist Paul Krugman argues that unprecedented extended unemployment benefits can’t have been the cause of the unprecedented average duration of unemployment during the “Great Recession.” He reasons, “If unemployment is high because people are unwilling to work, reducing the supply of labor, why aren’t wages going...
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Two Minimum Wage Fallacies



According to a recent report, Democrats plan to use a drive to increase federal and state minimum wages as a 2014 election strategy. (“Democrats Turn to Minimum Wage as 2014 Strategy”, NYT 12/30/13.) Generally, a binding minimum wage law will reduce the employment of the lowest-skilled workers. However, two economic fallacies that cloud the...
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Money for Nothing: Inside the Federal Reserve



I taught Money and Banking for 40 years at Ohio State and before that at Boston College, and never once used a movie in class. However, after viewing Jim Bruce’s new documentary, Money for Nothing: Inside the Federal Reserve last night at the Museum of American Finance, I would not hesitate to use this...
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A Chance to End the Great Recession



It is elementary economics that subsidizing an activity encourages it to expand, while taxing an activity encourages it to shrink. Unemployment benefits subsidize unemployment and are paid for, sooner or later, by taxes on employment. The natural result is more unemployment and less employment. The current “Great Recession” has only been the second worst...
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Questions—and Answers—for Janet Yellen



The Senate hearings to confirm Janet Yellen as Federal Reserve Board Chairwoman are likely to be held next week, according to news reports. Here are some Questions that I hope the Senators will ask her, along with what I regard as the Wrong Answers and the Right Answers. I expect that her actual answers...
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The Defaults of 1933, 1862, ... and 2013?



Pundits tell us that the US government has “never” defaulted on its debts. However, this generalization overlooks the very significant defaults of 1933 and 1862. Prior to 1933, US Treasury bonds were promises to pay gold at $20.67/oz. Yet one of the first acts of the Franklin D. Roosevelt administration was to revoke this...
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Fannie Mae, Freddie Mac, and Feddie Sue: What Should We Do with Them?



Mortgage Intermediation Mortgage intermediation is an important and legitimate business, much like grocery intermediation: In theory, urban consumers could drive to the country to buy groceries directly from farmers, or farmers could go door to door selling produce, but in practice it’s usually more convenient if farmers sell their products wholesale to intermediaries who...
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