Economics

美国会出什么问题？

Oct 26, 2016 Martin Feldstein

美国剑桥—尽管美国经济情况不错——已经达到了事实上的充分就业，通胀率也接近2%——但充满不确定性的世界仍然值得我们考虑未来一年可能出现哪些状况。毕竟，如果美国经济陷入大麻烦，就会对欧洲、日本和其他许多国家造成负面影响。

当然，经济问题可能源自国际政治事件。俄罗斯一直在东欧和中欧玩火。中国在东海和南海的领土主张及其在大东亚的政策正在增加地区不确定性。意大利的情况可能让欧元区陷入危机。

但在美国国内，最大的风险是资产价格暴跌，这将累及家庭和企业，导致总需求崩塌。我并没有在预测会发生这样的情况。但随着资产价格涨势越来越脱离历史常态，情况也变得越来越危险。

To continue reading, register now.

Subscribe now for unlimited access to everything PS has to offer.

As a registered user, you can enjoy more PS content every month – for free.

Already have an account? Log in

Subscribe to PS Digital

Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.

Subscribe Now

Martin Feldstein

Writing for PS since 2008
130 Commentaries

Martin Feldstein was Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research. He chaired President Ronald Reagan’s Council of Economic Advisers from 1982 to 1984. In 2006, he was appointed to President Bush's Foreign Intelligence Advisory Board, and, in 2009, was appointed to President Obama's Economic Recovery Advisory Board. He was also on the board of directors of the Council on Foreign Relations, the Trilateral Commission, and the Group of 30, a non-profit, international body that seeks greater understanding of global economic issues.

new comment has been posted. new comments have been posted.

0 Comments on this paragraph, 27 Comments on this article

Roger Merritt Nov 28, 2016

So the market is mispricing "assets" and cannot be trusted to direct capital to its most efficient use? Since it is, after all, unable to factor the effect of deficient aggregate demand for goods and services into its calculations. I notice this a lot from conservative economists, like Alan Greenspan. When the market is doing what they like, it is omniscient and infallible. When it is doing something they don't like it is wrong. Hard for a non-economist like me to keep up.
A new reply to this comment has been posted.
John Ellis Oct 30, 2016

Uncertainty is an ever present condition. Sometimes more acute than at others. Right now for the US economy the uncertainty is relatively contained so Feldstein who is something of a perma bear is attempting to create some by giving us another of his Jeremiads. US equities are not cheap at around 17 times earnings but neither are they in the stratosphere and earnings their main driver are holding up surprisingly well. The historical average is a essentially a phony metric. Commercial real estate prices are rising because they completely tanked during the great recession. They're over heated in some markets but overall not so. Bond yields are where they are principally because the world is awash with cash, a situation not likely to change any time soon and if the crisis Feldstein posits were to happen US bond prices would soar and yields collapse. So yes some mild uncertainty Situation normal.
A new reply to this comment has been posted.
Robbie Jena Oct 30, 2016

Items to think:

CHINA
Exports from China amounted to US$2.282 trillion in 2015, up 20.2% since 2011 but down -2.6% from 2014 to 2015. China’s top 10 exports accounted for 67.6% of the overall value of its global shipments.
USA
American exports amounted to US$1.51 trillion during 2015, up 1.5% since 2011 but down -7.1% from 2014. America’s top 10 exports accounted for 68.4% of the overall value of its global shipments.
A new reply to this comment has been posted.
Per Kurowski Oct 30, 2016

While the distortion of the allocation of bank credit continues, America will keep on going wrong.

http://subprimeregulations.blogspot.com/2016/10/with-risk-weighted-capital-requirements.html
A new reply to this comment has been posted.
G. A. Pakela Oct 27, 2016

Chairman Bernanke unleashed unconventional monetary policy, particularly the multiple rounds of QE without any public discussion or vetting, and holding the overnight rate at close to zero for years on end. Now we are in a situation in which it is all but impossible to normalize policy without triggering a recession. And yet, monetary policy has not increased growth in money supply, and the velocity of money has slowed to a crawl. What if Chairman Bernanke had held true to his "forward guidance" to start increasing overnight rates when unemployment reached 6.5% and kept QE in the theory book? Interest rates and financial assets would be been valued by the market instead of central bankers, and we would not be having this discussion.
A new reply to this comment has been posted.
Paul Daley Oct 27, 2016

Feldstein is right about the risk, but silent about measures to offset the risk. Most obviously, central banks should look to close the gap between asset prices and income flows that they themselves created by shifting finance from asset purchases to income supplements. Governments can mediate that shift by running central bank-financed deficits, but there is no reason why central banks should not develop the capacity to lend against private incomes as well as government revenue. That they can't do so now is just an artifact of their origin. But it's a dangerous artifact that effectively obliges central banks to distort economies as they try to stimulate them. That is dangerous, with the dangers being just those that Feldstein describes.
- Jose araujo Oct 27, 2016
  
  What if asset prices - stocks - are growing because agents consider blue chip stocks a reserve of value, a close substitute for sovereign bonds?
  
  Clearly asset prices are not up due to market exuberance; we don't see IPO's and other phenomena associated with agent irrationality, and the asset price is consistent with a change in risk/liquidity perception and value.
  
  Translating, investors are not buying stocks to have high returns; they are buying stocks because the probability of losing money is lower. Once risk perception changes and markets returns to normal, investors are going to sell the blue chip stocks and get into higher risk investments.
  A new reply to this comment has been posted.
A new reply to this comment has been posted.
Jose araujo Oct 27, 2016

Another question to Mr. Feldstein. If asset prices are growing why do agents still buy 0% and negative bonds?

To make an analogy, Mr. Feldstein and others, still believe the earth is flat and that the sun revolves around earth, and are coming up with weird explanation on why the earth shadow on a moon eclipse is round…

Mr. Feldstein is suggesting a direct link between the monetary base and financial markets which simply doesn’t exist. Banks are not lending so agents can buy stocks. There is much more money being poured into sovereign debt at zero % rates than stocks.
A new reply to this comment has been posted.
John Brian Shannon Oct 27, 2016

Hi Martin,

Your concerns are well-taken here.

However, I do think that as asset prices collapse (and they probably will, but only incrementally, thanks to the Fed's smooth and stability-enhancing leadership) institutional investors from Asia, along with individual Asian investors, will pick up nearly all of the slack.

Whether America is ready for almost complete foreign ownership of a majority of its assets, is quite a different matter.

Once that process is complete, we can thank (the then-right-for-the-times) Reagan tax cuts (that should've been cancelled by 1990, or even 2000 at the latest) and we can thank the GWB tax cuts which should've been cancelled by 2010.

All of which CREATED a whole class of people who either sent their investment money to Asia, or who simply dumped it into a bank account in the U.S. which has caused record excess liquidity -- and that class of people are, of course, the 1 percent.

Half the wealth in the world is now owned by the 1 percent, and by 2030 some 75% of the world's wealth will be owned by the 1 percent -- who will continue to send it to Asia or dump it into their U.S. bank accounts.

That alone is what is causing capital flight from North America -- and excess liquidity in the U.S. banking system.

Which is why we will have an asset price crash in North America.

Thanks to Janet Yellen, it will be a slow-motion crash.

Now, everyone in the top two quintiles, turn and face the Marriner S. Eccles Federal Reserve Board Building at 20th Street and Constitution Avenue, N.W., in Washington, D.C. and bow deeply, mouthing the words, "Thank you, Janet."

It's a privilege to read your fine essays here at ProSyn. Thank you for making them publicly available.

As always, very best regards, JBS
A new reply to this comment has been posted.
jagjeet sinha Oct 26, 2016

NINE NEW YORKS
The detrimental effects of decreased Asset Prices on Demand is the reason the Professor is arguing against Rate Increases.
The Market Capitalization of these Assets is based on their Prices - BUT Market Capitalization needs more Assets as much as Prices.
So, Market Capitalization be enhanced despite lower Asset Prices - should it be possible to ENHANCE THE ASSET POOL.
In a ZIRP regime, State Interventions can ENHANCE THE ASSET POOL - by creating Public Infrastructure Asset Programs.
Market Valuations for ENHANCED ASSET POOLS will overcome any detrimental effects of decreased Asset Prices of existing Assets.
The Professor is worried about Asset Prices in "OLD DELHI" - but there are now Nine "NEW DELHIS" - Market Capitalization infinitely larger.
The depressive consequences of lower Asset Prices in "OLD DELHI" on Demand - will just be a footnote in history.
Once the "NEW ASSET POOLS" crystallized with Market Valuations sufficient in size - the Demand consequences compensates.
So, bolstering "OLD DELHI" Asset Prices with QE becomes inconsequential.

The analogy may help in explaining the rationale for NEW PUBLIC INFRASTRUCTURE ASSETS as the preferred State Interventions.
QE to date seems to have been bolstering OLD ASSETS AND THEIR PRICES.
Nine NEW YORKS instead of One Old "New York".
A new reply to this comment has been posted.
Kenneth Pao Oct 26, 2016

Dr Feldstein,

I find your statement "...conditions are becoming more dangerous as asset prices rise further and further from historic norms ..." difficult to understand.

Since the FED pursued multiple QE actions pushing excess liquidity into the system effectively pushed up all asset prices that, of course, is going to be higher than "historical norms".

Did I miss something in my Econ 101 class ? Thanks.
- Jose araujo Oct 27, 2016
  
  I presume that by asset prices Mr. Feldstein means Stocks and Bonds, because other assets have not increased prices.
  
  Now regarding bonds, its quite easy to understand why "prices" are going up and yelds are going down, its just natural when interest rates go down, but what is not normal is that the abnormal increase in supply of bonds doesn't increase rates and decrease yelds. Tthis is not a common situation, since in the past the normal is for the issuing of bonds and monetary expasion to caude the bond brices to go down, not up.
  
  Regarding stocks the same hapens, since the reduction of the discount rate will push prices up and the widening of risk should push stable stocks up.
  
  Agents are taking refuge on ble ship stocks, that's why they are up, and that's why unlike past situations of "inflated" expectations regarding the stock markets, we are not witnessing a wave of IPO's.
  A new reply to this comment has been posted.
A new reply to this comment has been posted.
Doug Stohlman Oct 26, 2016

What could go wrong? Well, nothing much other than Minsky's Financial Instability Hypothesis. Seems to me to be way over due only put off by massive CB QE and bond purchases. But unless Minsky is proven wrong, it is just a matter of time before reset occurs.
A new reply to this comment has been posted.
P. Kamath Oct 26, 2016

Well, it is so nice engage in these futuristic Fantasia coming from academia! More room for expanded versions too from lesser mortals!
A new reply to this comment has been posted.
Jose araujo Oct 26, 2016

Mr. Feldstein.. if we are living on times of un-called extraordinary monetary expansion, why are we experiencing no inflation?

And please, no tin foil hat explanations.
- Jose araujo Oct 27, 2016
  
  Doug, you cannot over produce and cut wages, since that would lead to over supply and under demand.
  
  We have fisher equality where Money base times its velocity equals production times level of prices. The famous MV=PY.
  
  So if M is increasing which aggregate is accommodation its growth? Prices? Product? We aren’t experiencing growth in either.
  A new reply to this comment has been posted.
- Doug Stohlman Oct 26, 2016
  
  Joe, No inflation because monetary expansion has created over production by corporations who because of a now world labor market can under pay the workers. All the benefits go to the top and the general public has to borrow to exist. It is just a matter of time before the entire Ponzi Finance inverted Pyramid comes crashing down.
  A new reply to this comment has been posted.
A new reply to this comment has been posted.
Jose araujo Oct 26, 2016

Mr. Feldstein, it’s only normal in times of uncertainty for the less risky assets to increase price.

Now, monetary expansion has nothing to do with it, actually there are many, many episodes of monetary expansion where what you call "asset" real prices fall, actually in normal conditions that's what hapens, because this assets become more risky and they are dumped.
A new reply to this comment has been posted.
Michael Public Oct 26, 2016

This situation you describe shows the severe deficiency in the way in which nations report figures. Any money lent by banks resulting from fractional lending is essentially the liability of the government because the government won't let banks fail.

If a country prepared a balance sheet like a corporation must do it would be apparent to everyone that the government simply financed passive assets to stave off a depression in 2008. Of course, as you describe, they can now never recall these loans without crashing the world economy.

So put another way, the American taxpayer (the 99%) has underwritten equity owners (the 1%).

Considering this, I suggest the only reasonable course of action is that the equity owners repay the taxpayers for this loan starting now.

I suggest a (real) 2% annual tax on the value of any passive American assets held by anyone. Equities. Property. Bonds. Bank accounts.

This tax will put pressure on the owners of capital to instead invest in active assets i.e. businesses which actually create growth, as opposed to this current style Goldman Sachs value creation where you steal from the taxpayer to pay the rent seekers.
- Jose araujo Oct 27, 2016
  
  Michael, I wasn't saying its the best, but probably the most efficient.
  
  The beauty of the scheme is that the burden odoesn't fall on the taxpayers, but on bond holders, since this are the ones financing the projects.
  
  Regarding the fail government projects, well to my knowledge the rate of failure of public project is much lower than private..
  A new reply to this comment has been posted.
- Michael Public Oct 27, 2016
  
  Hi Jose - the problem with putting the burdon on government is manyfold:
  
  1. They don't represent the bulk of the economy - business do.
  
  2. They have to raise everything as a payroll tax on the 99% whose have very little to spare as you approach the bottom three quintiles.
  
  3. Government involvement typically leads to pork, project failure and massive ineffeciences. Business has none of these problems.
  
  Of course you are right, the government doing that would help, but it is not the very best way to do things. Helicopter money is a one-trick-pony. If you do it twice you create the bread and circus type economic problems ancient Rome had.
  A new reply to this comment has been posted.
- Jose araujo Oct 26, 2016
  
  Micheal, what you say would be simple if the government instead of stocking liquid assets would start investing in infrastructures or at least start spending the money in real goods and services.
  
  Helicopter money would also do, I think, although ut has never been tried.
  A new reply to this comment has been posted.
A new reply to this comment has been posted.
Michael Public Oct 26, 2016

"Economic problems could of course originate from international political events. Russia has been acting dangerously in Eastern and Central Europe"

Understatement of the century. There is no way in hell that America and Russia will go into a large scale conventional war and simply assume the other side will not use nuclear weapons. I might remind you there is no practical defense against mass ICBMs and submarine launched nukes. Everybody dies in this scenario. When everyone is dead it is fair to say that the economy will suffer.
- yw yap Oct 27, 2016
  
  may i add on to Janos Nagy's list...... H Clinton admitted that the US's budget deficit is financed by China's purchase of USTBs so there gotta be ways to disrupt the Chinese so as not for them to have a free hand to pull the rug under US's wobbly feet. Guess the US economy should be in better shape if the leaders focus on doing the right thing as opposed to doing the political thing?
  A new reply to this comment has been posted.
- Janos Nagy Oct 26, 2016
  
  Let me see this clear Jose.
  Putin and trump are friendly but of course they will kill each other.
  Now putin and hilary don't like each other so it means they will kiss and make up
  By the way I stopped reading when the author stated that the usa economic is a in a good shape.
  Really? So why is 0 percent interest rates and why the government need to deficit finance the economic
  A new reply to this comment has been posted.
- Jose araujo Oct 26, 2016
  
  Unless Putin helps Trump, and the rigged election claim...
  A new reply to this comment has been posted.
A new reply to this comment has been posted.