Endnotes

Introduction

1. Keynes, John Maynard, The General Theory of Employment, Interest and Money (New York: First Harvest/Harcourt Edition, 1964), 116.

2. Ibid., 117.

Chapter 1

1. Carmen Reinhart and Kenneth Rogoff, “A Decade of Debt,” Centre for Economic Policy Research, Discussion Paper No. 8310, April 2011.

2. Charles Roxburgh and team, “Debt and deleveraging: The global credit bubble and its economic consequences,” McKinsey Global Institute, January 2010.

3. National Population Projections, U.S. Census Bureau; http://www.census.gov/population/www/pop-profile/natproj.html.

4. R.D. Richards, The Early History of Banking in England (London: P.S. King), Chapter 3; and “Economic History: Supplement to the Economic Journal” II, 1930, 45–62.

5. John M. Keynes, “Economic Possibilities for Our Grandchildren,” 1930. Reprinted in Essays in Persuasion (New York: W.W. Norton, 1963), 358–73.

6. John M. Keynes, The General Theory of Employment (New York: First Harvest/Harcourt Edition, 1964), 113.

7. Ibid, 118.

8. Alan Greenspan, “Activism,” International Finance 14 (2011): 165–182.

9. Ibid.

10. Ibid.

11. Ibid.

12. Manmohan S. Kumar and team, “Fiscal Rules—Anchoring Expectations for Sustainable Public Finances,” IMF December (2009).

Chapter 2

1. Abraham Maslow, “A Theory of Human Motivation,” Psychological Review (1943): 370–396.

2. Ibid.

3. Thorstein Veblen, The Theory of the Leisure Class (New York: Macmillan, 1899).

4. Ibid.

5. James Duesenberry, “Income, Saving, and the Theory of Consumer Behaviors,” Harvard University Press (1949).

6. Veblen, 1899.

7. Maslow, 370–396.

8. Diagnostic and Statistical Manual of Mental Disorders (American Psychiatric Association Pub, 2000).

9. Duesenberry, 1949.

10. Sigmund Freud, New Introductory Lectures on Psychoanalysis (New York: W.W. Norton, 1965).

11. Ibid.

12. Ibid.

13. Henry Murray, Explorations in Personality (New York: Oxford University Press, 1938).

14. Frederick Winslow Taylor, The Principles of Scientific Management (New York: Harper & Brothers, 1911).

15. Ibid.

16. Ibid.

17. Veblen, 1899.

18. Ibid.

19. Paul Nystrom, Economics of Fashion (New York: The Ronald Press Company, 1928).

20. Veblen, 1899.

21. Gordon Phillips, Seven Centuries of Light: The Tallow Chandler Company (Cambridge: Book Production Consultants, 1999).

22. Carolina Reid, “Sought or Sold? Social Embeddedness and Consumer Decisions in the Mortgage Market,” Federal Reserve Bank of San Francisco, Working Paper Series (2010).

23. Mark Granovetter, “The Impact of Social Structure of Economic Outcomes,” The Journal of Economic Perspectives (Volume 19, Number 1—Winter 2005).

24. Scott W. Frame and Lawrence White, “Technological Change, Financial Innovation, and Diffusion in Banking,” Federal Reserve Bank of Atlanta, Working Paper Series (2009).

25. Karen Dynan and Donald Kohn, “The Rise in U.S. Household Indebtedness: Causes and Consequences,” Federal Reserve Board, Finance and Economic Discussion Series (2007).

26. James W. Kolari, Donald R. Fraser, and Ali Anari, “The Effects of Securitization on Mortgage Market Yields: A Cointegration Analysis,” Real Estate Economics December (1998).

27. Steven Todd, “The Effects of Securitization on Consumer Mortgage Costs,” Real Estate Economics (2000).

28. Filipa Sa, Pascal Towbin, and Tomasz Wieladek, “Low Interest Rates and Housing Booms: The Role of Capital Inflows, Monetary Policy and Financial Innovation,” Bank of England, Working Papers (2011).

29. Scott and White, 2009.

30. Emine Boz and Enrique Mendoza, “Financial Innovation, the Discovery of Risk, and the U.S. Credit Crisis,” International Monetary Fund, IMF Working Paper (2010).

31. Enrique Mendoza and Marco Terrones, “An Anatomy of Credit Booms: Evidence from Macro Aggregates and Micro Data,” NBER, Working Paper (2008).

32. John Muellbauer, “Wealth Effects: Housing, Credit and Consumer Expenditure,” Federal Reserve Bank of Kansas City, Proceedings (2007).

33. John Benjamin, Peter Chinloy, and G. Donald Jud, “Real Estate Versus Financial Wealth in Consumption,” Journal of Real Estate Finance and Economics (2004).

34. Alan Greenspan and James Kennedy, “Sources and Uses of Equity Extracted from Homes,” Federal Reserve Board, Finance and Economics Discussion Series (2007).

35. Marques Benton, Stephan Meier, and Charles Sprener, “Overborrowing and Undersaving: Lessons and Policy Implications from Research in Behavioral Economics,” Federal Reserve Bank of Boston, Discussion Paper (2007).

36. Ibid.

37. Sydney Ludvigson, “Consumption and Credit: A Model of Time-Varying Liquidity Constraints,” Review of Economics and Statistics (1999).

38. Reuven Glick and Kevin Lansing, “Consumers and the Economy, Part I: Household Credit and Personal Saving,” Federal Reserve Bank of San Francisco, Economic Letter, 2011

Chapter 3

1. Leo Troy, The New Unionism (Fairfax, VA: George Mason University Press, 2004).

2. Eileen Norcross, “Public Sector Unionism: A Review,” George Mason University, Working Paper, 2011.

3. Troy, 80.

4. Wallace E. Oates, On the Nature and Measurement of Fiscal Illusion: A Survey (Canberra: Australian National University Press, 1988).

5. Amilcare Puviani, “Teoria della illusione Finanziaria,” Palermo, 1903.

6. James M. Buchanan, Fiscal Theory and Political Economy (Chapel Hill: The University of North Carolina Press, 1960).

7. Richard E. Wagner, “From the Politics of Illusion to the High Cost of Regulation,” Public Interest Institute at Iowa Wesleyan College 3:8 (2001).

8. James M. Buchanan, Public Finance in Democratic Process: Fiscal Institutions and Individual Choice (Chapel Hill: The University of North Carolina Press, 1967).

9. Paulo Reis Mourao, “Sins of the Older: The Case of Fiscal Illusion in Democracies” University of Minho, Portugal, 2010.

10. Oates, Wallace E., “On the Nature and Measurement of Fiscal Illusion: A Survey,” Australian National University Press, 1988.

11. Buchanan, 1967.

12. Milton Friedman, “The Limitations of Tax Limitation.” Policy Review Summer (1978): 7–14.

13. Ronald Reagan, Presidential debate, September 21, 1980.

14. David Ricardo, “Essay on the Funding System” in The Works of David Ricardo, with a Notice of the Life and Writings of the Author by J.R. McCulloch (London: John Murray, 1888).

15. Robert J. Barro, “Are Government Bonds Net Wealth?” Journal of Political Economy Nov./Dec. (1974): 1095–1117.

16. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (originally published 1776).

17. J. Tobin, “Essays in Economics,” Macroeconomics Vol. 1. Amsterdam: North-Holland (1971).

18. Wallace Oates, “Lump-Sum Intergovernmental Grants Have Prices Effects,” in Fiscal Federalism and Grant-in-Aid, eds. Peter Mieszkowski and William Oakland (Washington, D.C.: Urban Institute, 1979), 23–29.

19. Ibid.

20. J. Patrick O’Brien and Yeung-Nan Shieh, “Utility Functions and Fiscal Illusion from Grants,” National Tax Journal 43:2 (1990): 201–205.

21. James M. Buchanan and Richard E. Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes (New York: Academic Press, 1977).

22. The Center for Public Integrity, http://www.iwatchnews.org/2010/06/10/2654/white-house-visitor-log-too-big-some-spreadsheets, accessed June 11, 2010.

23. Ibid.

24. See http://www.nypost.com/p/news/opinion/opedcolumnists/item_cnW7XbCa9yS3ONgARv9gJL.

25. See http://articles.latimes.com/2009/may/11/local/me-cal-healthcare11.

26. See http://www.nytimes.com/roomfordebate/2011/02/18/the-first-blow-against-public-employees/fdr-warned-us-about-public-sector-unions.

27. Eileen Norcross, “Public Sector Unionism: A Review” (Working Paper, George Mason University, 2011).

28. Joseph D. Reid and Michael M. Kurth, “The Determinants of Public Sector Bargaining Legislation: Comment,” Public Choice 66 (1990): 177–182.

29. Norcross, 2011.

30. Ibid.

31. Chris Edwards, “Public-Sector Unions,” Tax & Budget No. 61 (March 2010).

32. Reynolds, M. “Making America Poorer: The Cost of Labor Law,” Washington: Cato Institute, 1987.

33. Holcombe, Randall G. and Gwartney, James D., “Unions, Economic Freedom, and Growth,” Cato Institute, Cato Journal, 30:1, 2010.

34. Norcross, Eileen, page 13.

35. Troy, Leo, “The New Unionism,” George Mason University Press, 2004.

36. Norcross, Eileen, page 15.

37. Edwards, Chris, “Public-Sector Unions,” Cato Institute, Tax & Budget, No. 61, March 2010.

38. Holcombe and Gwartney, 2010.

39. See http://www.nytimes.com/2009/11/04/us/04transit.html.

40. See www.kasiseredu.org.

41. See http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245302232522.

42. Joseph A. Narens and Christian Stracke, “Muni Market Bargains? A Closer Look at Municipal Debt, Deficits, and Pensions,” PIMCO, February 2011 (see http://www.pimco.com/EN/Insights/Pages/MuniMarketBargainsACloserLookatMunicipalDebtDeficitsandPensions.aspx).

43. Ibid.

44. See http://www.agingstats.gov/agingstatsdotnet/Main_Site/Data/2010_Documents/Docs/OA_2010.pdf.

45. See http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245302232522.

46. Buchanan and Wagner, 1977.

47. Ibid.

48. Ibid.

49. Ibid.

50. See http://www.nytimes.com/2011/06/24/nyregion/nj-legislature-moves-to-cut-benefits-for-public-workers.html?pagewanted=1&_r=1&ref=christopherjchristie.

51. Ibid.

52. Ibid.

53. Ibid.

Chapter 4

1. Joseph Gagnon, Matthew Raskin, Julie Remache, and Brian Sack, “Large-Scale Asset Purchases by the Federal Reserve: Did they Work?” Federal Reserve Bank of New York Economic Policy Review (April 2011).

2. J. Tobin, “Liquidity Preference as Behavior Towards Risk,” Review of Economic Studies 25, No. 2 (February1958): 65–86.

3. J. Tobin, “A General Equilibrium Approach to Monetary Theory,” Journal of Money, Credit, and Banking 1, No. 1 (February 1969): 15–29.

Chapter 5

1. See http://www.buffalonews.com/topics/chris-lee/special-election/article432808.ece.

2. Ibid.

3. Ibid.

4. Congressional Budget Office.

5. International Monetary Fund, report on the Currency Composition of Official Foreign Exchange Reserves (COFER): http://www.imf.org/external/np/sta/cofer/eng/index.htm.

6. CIA World Factbook; www.cia.gov.

7. See the OECD report, “Social Assistance in OECD Countries,” 1996, http://research.dwp.gov.uk/asd/asd5/rrep047.pdf.

8. www.g20.org and International Monetary Fund at http://www.imf.org/external/np/sec/memdir/members.aspx.

Chapter 6

1. U.S. Census Bureau.

2. See http://www.ssa.gov/oact/progdata/fundFAQ.html.

3. Social Security Administration, “Annual Report on the Financial Status of the Social Security Program,” August 2010.

4. Mary Meeker, “USA Inc., a Basic Summary of America’s Financial Statements,” February 2011.

5. Ibid.

6. John Maynard Keynes, The General Theory of Employment, Interest and Money (New York: Harcourt, Brace & World, 1936).

7. Ethan Ilzetzki, Enrique G. Mendoza, and Carlos A. Végh, “How Big (Small) are Fiscal Multipliers?” (Working Paper, IMF, March 2011).

8. Ibid.

9. Congressional Budget Office, “The Economic Effects of Federal Spending on Infrastructure and Other Investments” (June 1998).

10. Adam Smith, An Inquiry Into The Nature and Causes of The Wealth of Nations, (New York: Modern Library, 2000).

11. Daniel J. Wilson, “Fiscal Spending Jobs Multipliers: Evidence from the 2009 American Recovery and Reinvestment Act” (Working Paper Series, Federal Reserve Bank of San Francisco, February 2011).

12. Ibid.

13. See: http://mobility.tamu.edu/ums/report/congestion_cost.pdf.

14. American Society of Civil Engineers, “2009 Report Card for America’s Infrastructure,” (March 25, 2009): www.asce.org/reportcard.

15. Organisation for Economic Co-operation and Development “Main Science and Technology Indicators,” OECD Science, Technology, and R&D Statistics database (2010): http://dx.doi.org/10.1787/data-00182-en.

16. Ben Bernanke, “Promoting Research and Development: The Government’s Role,” delivered at Georgetown University at a conference titled “New Building Blocks for Jobs and Economic Growth,” May 2011.

17. Joseph Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper Perennial Modern Classics, 2008 reprint).

18. Theodore W. Schultz, “Investment in Human Capital,” The American Economic Review 51, No. 1 (March 1961): 1–17.

19. Named after Joseph Schumpeter (1883–1950) who was the originator of the theory that economic growth was strongly influenced by cycles of innovation. Northwestern economist Joel Mokyr devised the phrase in honor of Schumpeter, seeking to give a title to economic growth that is attributable to innovations and increased knowledge. Joel Mokyr, The Lever of Riches (New York, NY: Oxford University Press, 1990), 6.

20. Edward F. Denison, Trends in American Economic Growth, 1929–1982 (Washington, DC: Brookings Institution, 1985).

21. Nicolo Machiavelli, “Il Principe,” written c. 1505.

Chapter 7

1. Milton Friedman, “The Permanent Income Hypothesis: Comment,” American Economic Review 48 (1957): 990–991.

2. James Duesenberry, “Income, Saving and the Theory of Consumer Behavior” (Cambridge, MA: Harvard University Press, 1949).

3. Francisco Alvarez-Cuadrado and Ngo Van Long, “The Relative Income Hypothesis” (Department of Economics, McGill University, March 2009).

4. David Neumark and Andrew Postlewaite, “Relative Income Concerns and the Rise in Married Women’s Employment,” Journal of Public Economics 70 (1998): 157–183.

5. Matthew 19:23–24.

6. Richard Easterlin, “Does Economic Growth Improve the Human Lot? Some Empirical Evidence,” in Nations and Households in Economic Growth: Essays in Honor of Moses Abramowitz, eds. Paul A. David and Melvin W. Reder (University of Pennsylvania: Academic Press, 1974).

7. Easterlin, 1974 (http://graphics8.nytimes.com/images/2008/04/16/business/Easterlin1974.pdf.)

8. H. Cantril, The Pattern of Human Concerns (Rutgers University Press, 1965).

9. James Braid, Neurypnology (London: John Churchill, 1843).

10. Bernheim Hippolyte, Hypnosis & Suggestion in Psychotherapy (1884): 15–16.

11. J. Karremans, W. Stroebe, and J. Claus, “Beyond Vicary’s Fantasies: The Impact of Subliminal Priming and Brand Choice,”. Journal of Experimental Social Psychology 42:6 (2006): 792–798.

12. Karremans, Stroebe, and Claus, 2006.

13. Luciano Fadiga, Leonardo Fogassi, Vittorio Gallese, Giuseppe di Pellegrino, and Giacomo Rizzolatti, “Understanding Motor Events: A Neurophysiological Study,” Experimental Brain Research 91 (1992): 176–180.

14. S. McClure, D. Laibson, G. Lowenstein, and J. Cohen, “Separate Neural Systems Value Immediate and Delayed Monetary Rewards,” Science 306:5695 (October 2004).

15. McClure, Laibson, Lowenstein, and Cohen, 2004.

16. Baba Shiv, and Alexander Fedorikhan, “Heart and Mind in Conflict: The Interplay of Affect and Cognition in Consumer Decision Making,” Journal of Consumer Research (1999).

17. Board of Governors of the Federal Reserve, “Report to the Congress on Practices of the Consumer Credit Industry in Soliciting and Extending Credit and their Effects on Consumer Debt and Insolvency,” June 2006.

18. John Rae, Statement of Some New Principles on the Subject of Political Economy, Exposing the Fallacies of the System of Free Trade, and of Some Other Doctrines Maintained in the “Wealth of Nations” (New York: A.M. Kelley, 1834/1964).

19. Marco Battaglini, Roland Benabou, and Jean Tirole, “Self-Control in Peer Groups” (Princeton University, October 2001).

20. David Laibson, Andrea Repetto, and Jeremy Tobacman, “A Debt Puzzle” (NBER Working Paper Series, 2001).

21. R.H. Thaler and S. Benartzi, “Save More Tomorrow: Using Behavioral Economics to Increase Employee Savings,” Journal of Political Economy 112:1 (2004): 164–187.

Chapter 8

1. Franco Modigliani and Richard H. Brumberg, “Utility Analysis and the Consumption Function: An Interpretation of Cross-Section Data,” in Post-Keynesian Economics, ed. Kenneth K. Kurihara (New Brunswick, NJ: Rutgers University Press, 1954), 388–436.

2. James S. Duesenberry, Income, Saving and the Theory of Consumer Behaviour (Cambridge: Harvard University Press, 1949).

3. John Maynard Keynes, The General Theory of Employment, Interest and Money (New York: Harcourt, Brace & World, 1936).

4. Franco Modigliani, “Life Cycle, Individual Thrift, and the Wealth of Nations,” The American Economic Review 76: 3 (1986).

5. Robert Barro, “Are Government Bonds Net Wealth?” Journal of Political Economy 82 (1974).

6. See www.recovery.gov.

7. Milton Friedman, “A Theory of the Consumption Function” (Princeton University Press, 1957).

8. Alan Greenspan, “Activism,” International Finance 14:1 (2011): 165–182.

9. James M. Buchanan, “Public Debt and Capital Formation,” in Taxation and the Deficit Economy: Fiscal Policy and Capital Formation in the United States, ed. Dwight Lee (San Francisco: Pacific Research Institute for Public Policy, 1986), 177–94. Reprinted in Debt and Taxes, Vol. 14 of “The Collected Works of James M. Buchanan,” (Indianapolis, IN: Liberty Fund, 2000): 365–382.

10. James M. Buchanan, “Budgetary Bias in Post-Keynesian Politics: The Erosion and Potential Replacement of Fiscal Norms.” In “Deficits,” eds. James M. Buchanan, Charles K. Rowley, and Robert D. Tollison (New York: Blackwell, 1987), 180–98. Reprinted in Debt and Taxes, Vol. 14 of “The Collected Works of James M. Buchanan,” (Indianapolis, IN: Liberty Fund, 2000), 455–472.

11. James M. Buchanan, “Clarifying Confusion About the Balanced Budget Amendment,” National Tax Journal 48: 3 (1995).

12. James M. Buchanan and Richard E. Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes (New York: Academic Press, 1977).

13. Ibid.

14. Jerry H. Tempelman, “James M. Buchanan on Public Debt Finance,” The Independent Review 11:23 (2007).

15. James M. Buchanan, “Public Principles of Public Debt: A Defense and Restatement” Vol. 2 (1958) of “The Collected Works of James M. Buchanan,” (Indianapolis, IN: Liberty Fund, 1999).

16. Jerry H. Tempelman, “James M. Buchanan on Public Debt Finance,” The Independent Review 11:23 (2007).

17. James M. Buchanan, “Public Debt and Capital Formation,” in Taxation and the Deficit Economy: Fiscal Policy and Capital Formation in the United States, ed. Dwight Lee (San Francisco: Pacific Research Institute for Public Policy, 1986), 177–94. Reprinted in Debt and Taxes, Vol. 14 of “The Collected Works of James M. Buchanan,” (Indianapolis, IN: Liberty Fund, 2000): 365–382.

Chapter 9

1. Alan Greenspan and James Kennedy, “Sources and Uses of Equity Extracted from Homes,” Federal Reserve Board, Finance and Economics Discussion Series (2007).

2. Constantino Bresciani-Turroni, The Economics of Inflation, a Study of Currency Depreciation in Post-War Germany (Great Britain: Unwin Brothers Ltd, 1937), 335.

3. Irving Fisher, “The Debt-Deflation Theory of Great Depressions,” Econometrica (1933): 337–357.

4. Hyman Minsky, “Stabilizing an Unstable Economy” (Yale University Press, 1986).

5. Sydney Homer and Richard Sylla, A History of Interest Rates (Hoboken: John Wiley & Sons, Inc., 2005).

6. John Nugee, “Foreign Exchange Reserves Management,” The Bank of England, Handbooks Central Banking 19, 2011).

7. Charles Wyplosz, “The Foreign Exchange Reserves: Business as Usual?” Workshop on Debt, Finance and Emerging Issues in Financial Integration, United Nations Department of Economic and Social Affairs and Commonwealth Secretariat (March 2007).

8. Joshua Aizenman and Jaewoo Lee, “International Reserves: Precautionary versus Mercantilist Views, Theory and Evidence” (Working Paper, IMF, 2005).

9. Martin Feldstein and Charles Horioka, “Domestic Saving and International Capital Flows,” Economic Journal 90 (358) (1980): 314–329.

10. Maurice Obstfeld and Kenneth Rogoff, “The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?” from Ben Bernanke and Kenneth Rogoff, NBER Macroeconomics Annual 2000, 15 (The MIT Press, 2000): 339–390.