CERF Blog

When I worked for the Fed, there were televisions in our building’s gym, and they were always tuned to a financial channel. We joked about how the talking heads had an explanation for every market move. Then one day, someone told the truth. He said something along the lines of “we don’t know why the… Read more

Mistakes In 2012, Federal Reserve Chairman Ben Bernanke1 gave a speech on the importance of financial education.  People commonly make financial mistakes such as saving too little, taking on too much debt, holding too little life insurance, making bad investment decisions and paying excessive fees that are unnecessary.  The consequences of these mistakes can be… Read more

Previously Published in the Orange County Register on May 20. The headline read, “USC steals 2 star brain researchers from UCLA.” But there is much more to the story than what was in the article, which presented the event as a coup in a simple cross-town rivalry between two great universities. The real story is… Read more

One of the lessons that many people have taken from the financial crisis is that there was too much debt and leverage and too little equity capital.  Capital serves as a buffer against loss.  If this buffer is inadequate, the probability of financial failure is high.  During an economic boom, borrowers are eager to take… Read more

Previously published in the Orange County Register Over the past few months I’ve been privileged to hear two members of California’s Black Caucus speak, and I’ve been mightily impressed. Last fall, Sen. Roderick Wright (D-Inglewood) gave two presentations to a Southern California Association of Governments (SCAG) economic summit. He painted a portrait of California’s industrial… Read more

Gordon Pye was a finance professor at UC Berkeley in the 1970s.  Then he became Chief Economist at a bank in New York City.  After ten years or so, the bank was acquired by another bank that already had a Chief Economist.  So Professor Pye took early retirement and began to contemplate the appropriate rule… Read more

U.S. economic growth accelerated from 0.4 percent in the fourth quarter of 2012 to 2.5 percent in the first quarter of 2013. This acceleration was driven mainly by increases in consumption growth and inventory investment. Another factor was that government expenditure was less of a negative contribution to growth in first quarter by about half… Read more

Previously published in the Orange County Register Sarah Conly is a Bowdoin College philosophy professor who has recently gained some fame/notoriety/attention with a New York Times piece Three Cheers for the Nanny State (which argues that sometimes government should protect us from ourselves.). That piece has been rebutted by, among others, Jean Yarbrough, another Bowdoin… Read more

Previously published in The City Journal The New York Times loves California. Well, parts of it, anyway. Adam Nagourney, writing a few weeks after voters approved a temporary income- and sales-tax hike, reported that the state’s economic gloom was “starting to lift,” even before the tax had taken effect. Last month, Timothy Egan found “California… Read more

At first glance, this seems like a dumb question.  The Freddie Mac 30 year mortgage rate is approximately 3.75%, near its all-time low.  Based on this rate, the median income family can afford to purchase 200% of the median priced home.  This so-called “affordability” measure is the highest it has been in twenty years. Although… Read more

Previously published in the Orange County Register I encountered the phrase “A well-ordered anarchist society” in Michael Huemer’s book The Problem of Political Authority. The phrase grabbed my imagination, and it hasn’t really let it go. For most of us, those words just don’t go together. Our vision of anarchy is chaotic and violent. Huemer,… Read more

The California Economic Summit published a piece reacting to what President Obama’s push to raise the minimum wage from $7.25 an hour to $9 an hour would mean for California. There were a number of economists quoted who made some true statements – but they all missed the point. First, here is some of what… Read more

The year 1972 was a big one for me. I left the US Air Force, and I married the woman I still love. Once it dawned on me that I needed income to support my wife and our future family, I started looking about for what to do. I seriously considered working in one of… Read more

Journalist Helaine Olen has produced a strong criticism of the personal finance industry1.  She claims the industry does not add much value, makes unsubstantiated claims, charges huge fees, is fraught with conflicts of interest, and redirects attention away from its failures by preaching a false solution – financial literacy.  But aside from that, the industry… Read more

In the fiscal year beginning October 2008 (the 2009 fiscal year), federal government spending exploded from 20.8 percent of GDP to 25.2 percent of GDP.  This was due to a confluence of factors including a decline in GDP due to the recession, an increase in automatic expenditures such as unemployment insurance, the $750 billion Toxic… Read more