It is now widely recognized that economists and policymakers alike had been living a 30-year fantasy. The best government is not that which governs least. The best economy is not that which is abandoned to the invisible fist of the unconstrained market. Our national and individual security is...

Unlike the Papa, Mama, and Baby Bears faced by the storybook Goldilocks, our Goldilocks faced three ferocious grizzlies: a cascading, global financial crisis; global deflation and excess capacity (or insufficient demand); and a domestic fiscal surplus in conjunction with record private deficits.

The U.S. expansion has been driven to an unusual extent by falling personal saving and rising borrowing by the private sector. If this process goes into reverse, as has happened under comparable circumstances in other countries, there will be a severe recession unless there is a big relaxation...

Full employment without inflation can continue--with the right leadership, prudent policy changes to manage the dangers, and cooperation from all branches of the government.

The U.S. expansion of the past eight years has been fueled by a rise in private sector indebtedness. In 1997 U.S. private sector spending exceeded income for the first time since 1952, and since then the gap between the two has risen markedly. The situation closely mirrors that experienced in...

If you were to write yourself IOUs to provide for your retirement and put them in a safety deposit box, would you rest comfortably, assured that you would be able to purchase all the necessities of life in 2020? Well, President Clinton's is even worse.

The big question is whether the dollar--the world's reserve currency--can survive a steep fall in its value without the active support of the major central banks. Can the United States broker another Plaza Accord, as it did in 1985 when the dollar lost half of its value against the yen and the...

Inflation targeting has become an increasingly popular strategy for setting monetary policy during the last decade. While no countries had formal inflation targets before 1990, currently 22 countries use inflation targeting. One notable exception is the United States, where the Federal Reserve...

The tools of countercyclical monetary policy have been brought fully to bear on a potentially severe recession. This note argues, however, that such a policy is less effective in times such as these--that is, when uncertainty is especially high--and so is likely to be particularly ineffective in...

Neither Congress nor the president is on the right track. Rather than protecting the surplus, we should be increasing spending and cutting taxes to contain the looming world recession.