Creating money out of thin air

The Federal Reserve has taken some major action in an effort to stimulate the econnomy:

The Federal Reserve escalated its efforts to get the U.S. economic recovery back on track Wednesday, again entering the realm of risky and untested policy in response to the worst downturn in generations.

The plan to pump $600 billion into the financial system is designed to stimulate the economy in large part by lowering mortgage and other interest rates.

Although the approach carries significant risks for both the economy and the central bank’s credibility, the steps announced by Fed policymakers could represent the nation’s best hope for breaking free of sluggish growth, especially with bold initiatives unlikely from a newly divided Congress.

Fed officials concluded that growth is too slow to bring down the 9.6 percent unemployment rate and is at risk of staying that way for some time absent new action. They were also concerned that inflation has been running too low and were looking for a way to encourage modest price increases, which would give consumers and businesses more reason to spend money before its value declined and help energize the economy.

“The pace of recovery in output and employment continues to be slow,” the Fed’s policymaking panel, the Federal Open Market Committee, said in a statement. “Employers remain reluctant to add to payrolls. Housing starts continue to be depressed.”

The Fed usually manages the economy by adjusting short-term interest rates. With those rates already near zero, Fed officials had to dust off a strategy for boosting the economy that debuted during the darkest days of the financial crisis. The Fed plans to create money, essentially out of thin air, and then pump it into the economy by buying Treasury bonds on the open market.

via Fed to buy $600 billion in bonds in effort to boost economic recovery.

I am neither an economist nor an economist’s son, so could someone explain how creating money out of thin air could possibly be a good idea?

More bogus sex statistics about teens

Kevin DeYoung explodes some statistics going around about same sex relations among teenagers:

You may have seen this amazing news headline: 1 in 10 Teens Has Had a Same-Sex Partner. The story on AOL Health begins this way:  “Nearly one in ten teens has had a same-sex partner — double what previous research has shown, according to a surprising new study. The latest findings, published in the journal Pediatrics, reveal that 9.3 percent of teenagers say they have had at least one partner who is the same sex as they are. That’s about twice as many as indicated in a 2002 study of Massachusetts and Vermont teens showing 5 to 6 percent of teenagers had had same-sex partners. “. . . .

Wow! Who knew? 1 in 10 American teenagers has had a same-sex partner?! That’s really terrible/terrific depending on your point of view. What a revelation!The only problem with this revelation is that it’s false.

If the reporter for AOL had taken time to read just the abstract for the Pediatrics article she may have seen the heading “CONCLUSIONS” in all caps and noted this summary: Of sexually active adolescents, 9.3% reported a same-sex partner, a higher estimate than other published rates.AOL speaks of 1 in 10 teens; the original article concludes 9.3% of sexually active adolescents reported a same-sex partner. There’s a big difference. The survey analyzed data from 17,220 teenagers. Of those, 7,261 or 42% reported having had sex. So according this study 58% of teens are not having sex with anyone and 9.3% of those who have, had same-sex partners, or 3.9% of the total sample.

There are other reasons to be suspicious of the headline. For starters, as AOL reports later in the article: “The new research analyzed data from 17,220 teenagers in New York City who filled out public health surveys” emphasis mine. The whole Pediatric article is not available online so I can’t comment on the ins and outs of the methodology. But I have to believe that a study dealing with “teens in New York City who fill out public health surveys” is going to yield some different results than, say, teens in Dallas or Atlanta or Sioux Falls.

via Is It True That “1 in 10 Teens Has Had a Same-Sex Partner”? – Kevin DeYoung.

HT:  Joe Carter

Lessons for Conservatives

Republicans won big in the 2010 elections on a conservative wave.  But there are also lessons conservatives could take away from their victory.

They have a genuine popular movement in the Tea Party.  But Tea Partiers must remember that they have to field good candidates.  A person who just has the right beliefs or even the person who leads the local organization is not necessarily going to be a good candidate or an effective office-holder.  The Tea Party brought some new blood into the political scene, and some of their candidates–I think of Marco Rubio–are quite talented and have bright futures.  But when the Tea Parties fielded candidates whose only qualification was their zeal, they lost.

What are some other lessons conservatives can learn from the elections?

How Obama can win a second term

The crushing rebuke of the Democrats in the recent election by no means finishes Barack Obama.  He can easily win a second term by emulating the last Democratic President who likewise lost a midterm election but came back to win a second term.  Bill Clinton simply played along with the Republicans to the point of co-opting their positions.  Welfare reform was a Republican issue, but Clinton made it his own.  He also won the public’s sympathy.

President Obama could take upon himself the reduction of the deficit.  (Yes, he caused a big part of it, but that doesn’t have to matter politically.)  He could drastically cut corporate welfare, farm subsidies and the military, thus pleasing his left flank.  The Republicans would co-operate with his other cuts, such as eliminating  whole departments and highly-visible programs.  He could reform social security, perhaps by not letting rich people get it.  He could increase his popularity by just leaving Iraq and Afghanistan, while keeping up the drone assassinations.

I’m not saying he SHOULD do any of this.  I’m just describing what might be successful tactics.  What else could he do?

Stopping the letter bombs

The terrorists have another bright idea:  just make a bunch of bombs and put them in the mail!  It was a wonder the parcels were intercepted.  According to reports, we have to thank an ex-prisoner in Guantanamo who had been released and was living in Saudi Arabia.  He informed authorities and managed to even get them the tracking numbers of the packages.  The Saudis too did their part in stopping the mayhem before it happened.  They all deserve our thanks.

(I’m not linking to the story because the news reports go so far as to name the informer and print his picture.  The poor guy will doubtless get killed for his good deed unless he is given protection for life.)

HT:  Webmonk

Election post-mortem

Well, the House will be under the control of the Republicans with the Senate still in the hands of the Democrats.  What is your analysis and what are your projections?

A hung government is a good thing according to conservatives who want government to be checked and balanced into inactivity.  But might this thwart things that the government does need to do?


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