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2 months ago | 
theeditors.com | Ira Stoll |John H. Cochrane
The market woke up today to the significance of DeepSeek, an artificial intelligence company based in China that recently released a new model.
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2 months ago | 
grumpy-economist.com | John H. Cochrane
In case you haven’t heard, DeepSeek, a Chinese company, released a pretty darn good AI at rock bottom prices. “DeepSeek said training one of its latest models cost $5.6 million, compared with the $100 million to $1 billion range cited last year by Dario Amodei, chief executive of the AI developer Anthropic, as the cost of building a model.”From an economic point of view, this sort of advance was entirely predictable, though a bit surprising just how quickly it came.
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Jan 21, 2025 | 
grumpy-economist.com | John H. Cochrane
“Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” So wrote H.L. Mencken. It will be hard to have sensible public policy as long as our fellow citizens have foggy ideas about cause and effect. This thought came to mind reading the New York Times “40 Big Ideas to Make New York City More Affordable” last weekend. It is an interesting insight into how people think of these things.
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Jan 16, 2025 | 
grumpy-economist.com | John H. Cochrane
The Trump economic team is assembling and making plans. What advice might I give them? As I wait by the phone, here are a few thoughts. The current agenda seems straightforward but limited: Extend the tax cuts, deport some immigrants, tariffs, some industrial policy. My advice: Think much bigger. Yes, these will be a first year agenda, but also use that time to lay the ground work for transformational changes. What will be Trump’s legacy?
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Jan 15, 2025 | 
grumpy-economist.com | John H. Cochrane
Tariffs are in the air, but like many policies just what they do depends crucially on how they are implemented. Suppose I were put in charge of implementing a president’s desire for broad tariffs, and I could not just say “don’t do it.” What would I do to implement that desire in the most effective and least damaging way? First, tariffs are an answer. What’s the question? National security? Increase manufacturing employment?
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Dec 2, 2024 | 
grumpy-economist.com | John H. Cochrane
President Biden pardoned Hunter. Condemnation followed predictably and widely, even in the Atlantic and New York Times. I have a different reaction: Biden should have also pardoned President Trump. And a fistful of Trump associates as well. He should have called for an end to escalating lawfare between the parties. It would have been a legacy-defining step toward the “unity” on which he campaigned. As Biden put it so well, “they’ve tried to break me—and there’s no reason to believe it will stop here.
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Nov 25, 2024 | 
grumpy-economist.com | John H. Cochrane
ECB President Christine Lagarde provides a view into central banks pretty much diametrically opposed to Michelle Bowman’s, from my last post. President Lagarde is the head of the most prominent technocratic organization in Europe. If anybody embodies the vision of the supposedly rational, science- and evidence-based dispassionate technocrat, the head of the ECB is it.
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Nov 21, 2024 | 
grumpy-economist.com | John H. Cochrane
Fed Governor Michelle Bowman gave a very interesting speech last week. You might miss some of the news in her un-grumpy even tempered tone. Not much would be that newsworthy coming from a critic, but it is refreshing from a Fed insider.
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Nov 19, 2024 | 
grumpy-economist.com | John H. Cochrane
When we think of the astounding influence of economists such as Milton Friedman, George Stigler, Gary Becker and more, it is hard to remember just how much the socialist planning ideology was commonplace at the time. An email from Jesús Fernández-Villaverde at Penn reminds us: (without block quote) Tomorrow I will try to convince students that many people actually believed in central planning until quite late in the game.
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Nov 17, 2024 | 
open.substack.com | John H. Cochrane
Did “supply shocks” or “relative demand shocks” cause the recent inflation? Will tariffs raise inflation? Will deregulation and AI, by lowering costs, lower inflation? No. Don’t confuse the price level with the inflation rate. Don’t confuse relative prices with the price level. These ought to be the first lessons of macroeconomics. But many economists, and most politicians and commenters get them wrong.
