The Disappearing Money Multiplier

Econ prof Bill Seyfried of Rollins College emails me:

Here's an interesting fact that you may not have seen yet. The M1 money multiplier just slipped below 1. So each $1 increase in reserves (monetary base) results in the money supply increasing by $0.95 (OK, so banks have substantially increased their holding of excess reserves while the M1 money supply hasn't changed by much).

Thanks.

Glaeser on Stimulus

Ed weighs in.

The Protectionist Threat

Reuters reports:

Both President-elect Barack Obama and Vice President-elect Joe Biden will huddle with Democratic and Republican congressional leaders on Monday to try to advance a huge economic stimulus bill that Obama hopes can be enacted quickly, despite Republican reservations.

Obama's transition team said it is mulling "buy American" provisions for the stimulus package that could favor U.S. companies over foreign competitors.

Let's hope Larry Summers and Christy Romer are successful at beating back this bad idea.