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April 1, 2013

Why Does Marty Feldstein Wants Higher Interest Rates???

Today's what were you thinking when you wrote that award goes to Martin Feldstein:
Department of "Huh?!": I Don't Understand Why Marty Feldstein Wants Higher Interest Rates Right Now Weblogging, by Brad DeLong: I confess that I am having a hard time understanding Marty Feldstein's latest column…
Bond Bubble Brouhaha, by Paul Krugman: Brad DeLong is puzzled by Martin Feldstein’s mental contortions as he tries to come up with a reason to raise interest rates in a depressed economy. So am I. But I’m also puzzled by Feldstein’s underlying economic analysis, in which he treats it as totally obvious that we have a massive bond bubble.
Now, maybe we do have a bond bubble. But the arguments Feldstein uses are one that I thought every sensible economist — a group I thought included Feldstein — had dismissed as bogus years ago. ...
Financing the Deficit (More Feldstein), by Paul Krugman: OK, a bit more on the puzzle of people who think there’s an interest rate puzzle. Here’s the picture of what has happened to saving and investment in America in recent years...
So there isn’t any puzzle here, except the puzzle of people who are puzzled. I really don’t understand how Marty Feldstein can look at these facts and conclude that the only way to explain low interest rates is to imagine that the Fed is imposing massive market distortions. ...

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