QE3? Not So Fast. Let's Debate the Merits of QE2 First

The Fed's second round of monetary stimulus, the $600 billion QE2, ended on June 30. Since then, financial markets have rallied on news of another Greek bailout, and then fallen on weakening jobs and economic news from the U.S. The Dow is basically back to where it was when QE2 ended on June 30. So the world hasn't ended, and yet there are those who think we need a third round. The minutes of the latest meeting of Federal Reserve officials, released Tuesday, show them divided on whether to implement a third round of monetary stimulus. Before we get ahead of ourselves, let's first assess QE2. For that, we turn to two of our regular contributors, Justin Wolfers, and James Altucher.

Know Your Scarcity

Fred Brooks, the computer scientist who 35 years ago wrote the still-relevant The Mythical-Man Month, has written a new book, The Design of Design, and Kevin Kelly interviews him in Wired.

A New Car or Ten Thousand Lattes?

At Big Think, Dan Ariely discusses ways to think about money so you splurge less — like equating expensive wine with gallons of milk and making paying hurt a little more.

Do We Need a 37-Cent Coin?

A young economist I know, Patrick DeJarnette, believes a much more radical change in currency is warranted. Here is what Patrick writes:

Late one night I was curious how efficient the “penny, nickel, dime, quarter” system was, so I wrote a little script to compare all possible 4-coin systems, with the following stipulations:

Should Antoine Walker Be Arrested for Bouncing Checks? (Should You?)

I'm troubled by news reports that Antoine Walker was arrested for writing $1,000,000 in bad checks. The ex N.B.A. star -- Employee Number 8 -- was forced to do a perp walk as he apparently was led out of Harrah's Tahoe in handcuffs. The criminal complaint alleges that from July 27 to January 19, he wrote 10 separate $100,000 checks with insufficient funds to Caesars Palace, Planet Hollywood, and Red Rock Resort.

Advice Worth $1 Billion

Usually, when people talk in terms of billions of dollars, they are referring to macroeconomic questions. Recently, however, three economists (Jeremy Bulow, Jonathan Levin, and Paul Milgrom) were hired as consultants to advise a group that was bidding in a spectrum auction that would allow them to provide wireless service.

By following the advice of the economists, the group was able to purchase wireless coverage for the United States for $2.4 billion, while their major competitors ended up paying $3.5 billion for the same spectrum in the same auction. Thus, their advice was worth more than $1 billion to their clients.

No Cash in Japan?

When we last talked about abolishing paper currency, we joked about it happening in 2012. In Japan, where the future comes early, they're considering banning cash now, as a way to stave off deflation.

Still No Cash for Clunkers

Last year I blogged about the Cash for Clunkers program in which the government subsidizes consumers who turn in their beat-up old cars to buy new ones. I noted that this program was likely to have a host
of negative unintended consequences that its proponents were ignoring.

The bad news is that the House of Representatives has now passed a Cash for Clunkers bill. The good news is that the version they passed applies to so few vehicles that there is virtually no incentive for anyone to take advantage of the program, so its unintended consequences will be smaller than they otherwise would be.

Seriously, No More Cash in 2012

Should we get rid of physical cash in favor of all-digital currency? David Wolman thinks so.

What Do 3,000 Years Do to Wages?

One of the better-known biblical passages, Leviticus 27:1-7, lists the value of pledges of silver to the temple based on the value of a person: 50 shekels for a man between the ages of 20 and 60, 30 shekels for a woman of the same age, 15 shekels for a man over 60, and 10 shekels for a woman over 60. Once we ignore differences in labor-force participation, the earnings ratios today are not that far from what was expected 3,000 years ago.