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Major Capstone Project – Policy Journal

In Uncategorized on April 16, 2012 at 1:19 pm


To: Leon Panetta

Office Held: Secretary, Defense Department

From: Christopher Thomas

Problem Statement

North Africa is a cauldron of political and social unrest. The countries of Mauritania, Mali, Burkina Faso, Niger, Chad, Sudan, and South Sudan are among the poorest on the continent, and are home to almost entirely Muslim populations (1). North Africa is proving to be of increasing salience to world powers, as demonstrated by the French intervention there. Earlier this year, France intervened in the region to stave off the spread of jihadists in the Saharan state of Mali.

The al-Qaeda-linked militants threatened security in the country as they advanced from strongholds in the northern deserts toward Mali’s capital, Bamako. As France awaited response from the Obama administration to aid the effort, questions emerged in the United States regarding the exigency posed by the region and U.S. foreign policy on the whole.

Proposed Solution

Grand strategy is defined herein as the principles guiding the development of U.S. policy and strategy abroad. It is the cohesive argument about America’s role in the world (2). Of the possible strategies, selective engagement is the most tenable for the U.S., given the balance it strikes between the extremity policies (neo-isolationism and primacy) and its realistic conceptions of U.S. power and interests. It identifies peace between the great powers as paramount in fostering national security, and holds that intervention should be directed proportionately to U.S. interests. Several reasons, predicated on this model, exist as to why the U.S. should maintain its limited role in the region.

First and most straightforward is the looming sequester set to hit Washington on March 1, when $85 billion in budget cuts threaten to enervate Navy size and overall military readiness (3). Selective engagement recognizes that resources are finite and that interventions must be chosen carefully. Vis-à-vis its wars in the Middle East, one of which spanned the decade, the Western public feels that even the best-intentioned foreign intervention is bound to bog its armies down in endless wars fighting invisible enemies to help ungrateful locals (4). Such remonstrations are reflected by the Obama administration’s fear of a “slippery slope” if it were to intervene (5), as well as in an already prolonged French campaign. What was intended to be an intervention of “several weeks” has protracted into occupation lasting as long as necessary (6). Ramifications arguably correlated with the campaign are apparent in France’s halving of its economic growth forecast for 2013 (7).

It is clear what is at stake for the U.S. With turmoil in Syria and subsequent U.S. presence in Turkey (8), as well as diplomatic tension with nuclear Iran, a fast and hard policy for North Africa based on selective engagement is critical. Recognizing France as a world power and ally, the U.S. should continue providing it with the spy tracking technologies, refueling planes, and logistical support it requests (9), but nothing more. The U.S. should take a realistic approach to the region, recognizing it as a French-owned campaign, a threat predominantly to the Saharan countries themselves (10), and of low likelihood of al-Qaeda stronghold.

Disagreements abound in the Obama administration regarding the extent to which suspected al-Qaeda leaders in the Islamic Maghreb (AQIM), or the region of North African, directly threaten the U.S. and plot attacks against American targets. Moreover, Mokhtar Belmokhtar, the Algerian militant responsible for the January attack on an Algerian natural gas plant that killed 37 foreign hostages and three Americans, is unlikely to threaten the U.S. homeland, and links between AQIM and Boko Haram, a militant group in Nigeria whose bloody campaign to install Islamic law in Nigeria, are unstable (11).

A U.S. arm’s length approach to North Africa, consisting of meeting France’s support needs, allows the U.S. to concentrate on Eurasia, a region home to greater powers and resources. In addition, the U.S. has invested in securing the region endogenously through its roughly decade-long counter-terror training program for the West Africans (12). Greater U.S. involvement should only be considered if and when the AQIM shows interest in taking the fight to Europe, which it has yet to do (13).

Major Obstacles

Opponents of this plan may argue that the threat in the AQIM is real, as demonstrated by its supply of fighters to combat such as Iraq, Palestine, and Afghanistan between 2004 and 2006, as well as kidnappings and ransoms by Islamic jihadists (14). It can be argued that as an ally of Mali, it is incumbent upon the U.S. to stabilize the economy through rapid foreign aid and re-establish Malian security forces. In addition, the U.S. should not only work to assist France but also direct efforts as part of the United Nations to provide and implement a roadmap for sustained security in the region (14).

Claims to increased U.S. interest in North Africa may also be substantiated with regard to resources. Although this region’s average GDP per person in 2012 was $897, it is home to a cache of natural resources. Niger, Algeria, Burkina Faso, and Nigeria had billions of dollars in 2011 exports of uranium, natural gas, gold, and crude oil, respectively (15). While selective engagement does consider strategic resource interests, it also prioritizes those interests. Therefore, such an approach would unequivocally place more importance on the vast oil reserves and waterways of Eurasia, interests that power American commerce and industry.

As noted, the U.S. has invested in overseeing African troop training, and is committed to assisting the French intervention. However, North Africa currently lies outside the purview of U.S. selective engagement grand strategy, due to its current interests and interventions in powerful Eurasia, and national security funding issues. What is more, the French have elected to secure the region, which is, most significantly, of dubious threat to U.S. security and interests.

References, Footnotes, and Exhibits

1. The Economist. “Briefing: Jihad in Africa.” Vol. 406 Number 8820. January 26th-February 1st 2013. Exhibit: “Poor prospects: Sahel countries.” Prepared by IMF; World Bank; UNDP.

2. Posen, Barry R., and Andrew L. Ross. “Competing Visions for U.S. Grand Strategy.” International Security 21.3 (1997): 12.

3. The Wall Street Journal. “Navy trims goal for size of fleet.” February 6, 2013.

4. The Economist. “The Afrighanistan?” Vol. 406 Number 8820. January 26th-February 1st 2013.

5. The Wall Street Journal. “U.S. moving to broaden African presence.” January 28, 2013.

6. The Economist. “The intervention in Mali.” Vol. 406 Number 8820. January 26th-February 1st 2013.

7. The Wall Street Journal. “France set to cut 2013 growth forecast.” February 2-3, 2013.

8. The Wall Street Journal. “U.S. Helps Guard Turkey From Syrians.” February 6, 2013.

9. The Wall Street Journal. “U.S. moving to broaden African presence.” January 28, 2013.

10. The Economist. “Jihad in Africa.” Vol. 406 Number 8820. January 26th-February 1st 2013.

11. The Wall Street Journal. “Timbuktu site shows terrorist reach.” February 2-3, 2013.

12. The Wall Street Journal. “Troops are trying for shift in Mali.” February 7, 2013.

13. The Economist. “Jihad in Africa.” Vol. 406 Number 8820. January 26th-February 1st 2013.

14. Rao, S. Helpdesk Research Report: Conflict and Stabilisation in Mali and the Sahel region.        <;.

15. Bloomberg Businessweek. “What’s at risk in the war on terror in Mali.” January28-February 3, 2013.


Back to Basics: A Straightforward Analysis of Federal Reserve Policy and a Sound Recommendation Looking Ahead

In addition to all of the cliffs, crises, and partisan pettiness that has recently dominated American domestic affairs, policies of the United States central bank, the Federal Reserve (herein the Fed), have also entered the scene as a highly salient and contested policy area. This paper provides a comprehensive summary and analysis of contemporaneous Fed policy, as well informed suggestions for where it should head. It strives to serve as a compendium to the common investor.

The Fed of today would be unrecognizable to its founders[1]. From its humble beginnings as “a kind of beneficent technique of scientific control such as electricity or other branches of science are”[2] to primary orchestrator of America’s not-so-free market system, the Fed has increasingly taken a more hands-on—and unorthodox—approach to executing its purpose.

Serving as the handmaiden of its original 1913 task of mitigating future financial panics, the Fed was dually mandated with promoting both maximum sustainable employment and price stability[3]. Since the financial crisis of 2008, in which the bottom fell out of the real estate market and big banks fell into the red, the Fed has expanded the number of tools at its disposal to keep the economy afloat, and sought to “think about financial stability and monetary, economic stability as being in some sense the two key pillars of what the central bank tries to do.”[4]

Its means to these ends since 2008 has been Quantitative Easing, which seeks to mobilize credit by signaling to investors and businesses that money will be cheap and plentiful for a long time to come[5]. Through forward guidance, the Fed links its policy on interest rates to metrics like the unemployment and inflation benchmarks.

Interest rates are now around 0.14 percent, and are expected to stay that way for some time; in April 2015, the rate is forecasted to be at 0.3675 percent[6]. What are the implications of the Fed’s manipulation of this economic indicator? Is Fed policy assisting in boosting the nascent economic recovery, or is it a harbinger of tougher times to come? This paper attempts to answer some of the basic questions regarding monetary policy, provide recommendations for when and how Fed activity should be scaled back, and assess the significance of hesitations concerning further pursuit of Fed policy.

Perhaps the most visible Fed monetary policy has been the holding of short-term interest rates near zero. The Fed manages the short term rates on short term government securities, which in turn affects those securities’ yield, or the income return on investment, on short-term government securities. In doing so, impacted are many other interest rates in the economy such as corporate borrowing rates and mortgage rates. The appeal to investors of carrying out such a scheme?  It’s all about opportunity costs.

While holding down yield may seem counter-intuitive  low short-term rates for Treasurys (and also on investments such as bank deposits) make it less attractive to save money in those places but more attractive to move money into stocks and corporate bonds and so on to get a higher return on investment. U.S. companies and investors were sitting atop record cash troves at the end of September[7]. With the extra money going into stock and bonds, that means stock prices go up and bond yields go down (which is good for firms, since that means that they can borrow at cheaper rates). Sure enough, the Wall Street Journal reported that a key bond index experienced less investment in recent months as income-starved investors favor riskier, higher-yielding securities such as junk bonds and loans[8]. In sum, Quantitative Easing seeks to hold down long-term interest rates and encourage more spending, investment, and hiring[9] while simultaneously boosting the prices of assets like stocks and homes[10].

In addition to getting cash moving again, the near-zero interest rate policy also creates incentives for risk-averse investors like retirees to take on more questionable investments. The paltry interest income incentivizes them to search for higher yields in attempt to boost their returns. Moreover, the low-rates make it possible for banks to roll over rather than write off bad loans, locking up under-producing assets. Finally, extraordinarily low rates feed the spending appetites of Congress and the president, increasing deficits and debts[11]. The program is criticized in this last regard; it will be revisited below.

Sales of these short-term rates fund[12] the driving down of longer-term interest rates, which represent the second leg of Quantitative Easing. The Fed is buying $85 billion a month in U.S. treasury debt and mortgage backed securities ($40 billion and $45 billion, respectively[13]), thus ballooning assets to $3 trillion since the crisis. This shifting of the duration of its portfolio by selling short-term securities and buying longer term ones is known as operation twist,[14] a $45 billion a month program in which the Fed buys long-term Treasury securities and funding the purchases with sales of short-term Treasurys[15]. So far, the Fed has replaced $667 billion in short-term Treasurys on its balance sheet with an equivalent amount in longer-term Treasurys[16]. The forward guidance keeps the long-term rate below natural levels and tends to prevent it from rising, thereby effectively creating an interest-rate ceiling on the longer-term market by saying it will keep the short rate unusually low.

To put this asset increase in perspective, the Fed’s balance sheet has greatly expanded from less than $1 trillion at the end of 2007 to more than $3 trillion today[17]. With interest rates so low, the central bank cannot push its policy interest rate lower, so it instead turns to purchasing assets in an attempt to influence broader market interest rates[18]. Right now the Fed is earning large returns on its bond portfolio and sending most of its profits to the Treasury[19].

How long until the Fed should start watering down the punch bowl[20], as a tightening up of these measures is referred to in economic parlance? The Fed asserts that it will hold its policies until unemployment drops to 6.5 percent[21] and when inflation creeps up to 3 percent[22]. However, the unemployment threshold may not be an entirely straightforward metric. Although the economy experienced labor gains in February, it is difficult to account for nuances in the measure such as companies that are waiting out to hire ideal people or workers who are taking lower jobs. Therefore, it won’t be until the unemployment rate has fallen so far that wage growth clearly accelerates—when companies start paying up across the board to fill positions—that a trustworthy reading of unemployment will be available[23].

To clarify these nuances in the unemployment rate, the Fed turns to other measures of economic health. For example: the change in nonfarm payrolls (thus eliminating monthly anomalies and giving a clearer picture of the recent trend), the unemployment rate (those who don’t have jobs and actively sought work in the prior four weeks), broadest measure of joblessness (includes everyone in the official rate plus marginally attached workers, those who are neither working nor looking for work, but say they want a job and have looked for work more recently, and people who want full-time work but took a part time schedule instead because that is all they could find), and finally the Gross Flows share of unemployed who found work[24].

To take it back to fundamentals, economics is how decisions in various parts of the economy affect the allocation of scarce resources in a way that raises or lowers the material standard of living of the people as whole. The volume of goods and services, not money, determines this standard. With investors panicked from losses in recent fiscal disasters, and companies cautious about expanding due to uncertainty in Washington, the Fed has attempted to boost investment and confidence in the economy to grease its skids.

Still, some economists worry that the cost of these monetary measures are foreboding. They therefore propose a Fed volte-face in fiscal policy. To keep buying the long-term bonds, they argue, the Fed would need to fund those purchases by creating new bank reserves, which in effect is printing money[25]. In addition to economist worries of inflation, aegis could also be waning politically. As the length of the program expands indefinitely, the Fed may face greater pushback from people trying to save for the future who contend that a protracted Quantitative Easing program is operating under the façade of stimulus, but is really meant to help the government pay down some of its debt so it can spend further[26]. Supports of such an argument might point to the fact that the interest-rate policy hereinbefore examined was the brainchild of the Treasury, not the Fed (although the policy’s continuation ultimately lies with the Fed).

After analyzing the decision process leading up to quantitative easing in 2008, Stanford economist Allan Meltzer warned that Fed officials usually focus too little on the long-run consequence of their policies[27]. One particular long-term concern is asset-price bubbles. They occur when resources are unnaturally drawn into a particular rapid-growth sector. This triggers more investment and demand, thus causing prices to rise. Eventually, the mobilization into the market segment reverses—more and more investors sell, hoping to realize gains, and transfer their funds elsewhere, crashing that particular asset.

Kansas City Federal Reserve President Esther George observes this trend in bond prices, agricultural land, and high-yield loans, which are all at historically high levels. George and her acolytes worry that continuation could lead to future financial imbalances and overheating in parts of the credit markets[28].

But the biggest risk to the economy remains tied to inflation. A historical perspective countervails current Fed policy by pointing to the Greenspan Board. The truth revealed by Greenspan’s Fed is that the longer it takes unemployment to reach a level that pleases the Fed—no sooner than 2015 in its own forecasts—the more kindling that is building up for a potential inflationary wildfire down the road[29]. The falling price of gold can be used as a gauge of inflation,[30] which shows that in the long run the Fed risks destabilizing the currency system. Coupled with the risk of inflation ultimately destroying the bond market is the risk of destabilizing the dollar. Some argue that manic buying—now running at $85 billion a month in Treasury and agency paper—will ultimately destroy the dollar[31]. Here, concerns pertain not to the Fed’s timeframe for stopping its bond-buying program, but rather that the Fed is overplaying its hand.

The Fed’s role within the economy also causes tension among some circles. Its excursion into fiscal policy and credit allocation raises questions about its institutional independence and accountability[32]. John C. Cochran admonishes that an agency that allocates credit to specific markets and institutions, or buys assets that expose taxpayers to risks, cannot stay independent of elected, and accountable, officials[33]. Gravitating away from its open-market tools of purchasing short-term Treasury debt was the tradeoff in maintaining its independence.

Even though some might perceive as problematic the Fed’s possible continuation of a scheme whose sole purpose is to assist the government is spending more, the biggest threat, it is argued, in Quantitative Easing is to the individual investor. The uncertain climate borne from endless conjecture about the state of the economy is not conducive to growth. Moreover, the policy’s advocacy for risk-taking could backfire as investors big and small take ever-greater risks as they seek investments that promise better returns[34]. Stanford Economist John Taylor ascertains misallocation of capital could occur as investors chase yield above all. For instance, the bond market, particularly the municipal bond market, has been inundated with investors following quantitative easing. Since these bonds don’t yield anything until maturity, however, their value is likely to fall more sharply than traditional bonds as interest rates inevitably increase in the future[35].

And the investor could encounter even more drawbacks of Quantitative Easing once rates are raised. In 1994 the Fed raised interest rates after a long plateau, startling the bond market and sinking Orange County Co. and other bond investors. These mark-to-market losses, which are incurred after investors assign altered market values to their assets, can potentially be destabilizing to investors. Any sudden increase in interest rates means that current holdings will be worth less, creating a bumpy transition out of the policy. The $30 trillion bond market could experience turmoil from runs at money market funds or stocks[36].

What is more, the interest-rate ceiling alluded to earlier can cause a perverse effect when this ceiling is below what would be the equilibrium between borrowers and lenders who normally participate in the market. While borrowers may like a near-zero rate, there becomes little incentive for lenders to extend credit when returns are held so low.

Some economists further admonish the Fed to discontinue its policies out of concern to the vitality of the Fed itself. A hypothetical to understand how the Fed could lose substantially on its holdings is in order. Suppose that the Fed, in a reversion to normal, raises interest rates to 5 percent over the next few years. Even though this is not a big tightening, with the $18 trillion of debt outstanding, the Federal government will have to pay $900 billion more in annual interest[37]. Thus, higher rates equal higher deficits. Cleveland Federal reserve President Sandra Pianalto advised minimizing such risks through aiming for a smaller-sized balance sheet than would otherwise occur if they were to maintain current policy[38].

A smaller balance sheet would prevent the Fed from having to sell bonds at a loss and incur higher expenses on interest it pays when it sells bonds and raises short-term interest rates once the economy strengthens[39]. Critics substantiate their claims that losses can build quickly by citing the Bank of England’s recent experience with bond-buying. The Bank, which is the biggest holder of UK government bonds thanks to its quantitative easing program, saw mark-to-market losses of £7 billion ($11 billion) as yields rose in the first 10 days of January. As yields rise, there is more room for them to fall, meaning losses are more likely[40]. A similar fiscal crunch[41], when escalating debt interest payments create higher budget deficits and debt levels, could happen in the U.S.

Just as the Fed bases Quantitative Easing on the state of the labor market, so, too, should it base its endgame for the program. Investors respond to jobs reports by swapping their money out of stocks and into bonds. Even with the auspicious, record-setting highs of the S&P 500, the economy reacts most swiftly to headwinds of employment uncertainty. Therefore, the Fed’s goal should be to do everything in its arsenal to combat falling employment. Enticing investors to involve their assets in the stock market can give the economy the jumpstart it needs. With time, moneys kept out of bonds will be put to work spurring business. Improved job reports will follow thus allowing the Fed to take a bow and pare back its fiscal policy.

Opinions of attenuating Fed policy in the immediate future have not been convincing, both in their lack of reasonable alternative Fed policy proposals and their discount of the basic economics, in that businesses who sit on troves of cash do not create robust opportunities for growth. Critics have offered little more than qualms with the current system, as in the bond-buying program making long-term Treasurys too expensive without significantly easing problems in the labor market[42], and criticizing the relative economic growth of 2.4 percent in 2010, 1.8 percent in 2011, and 2.2 percent in 2012, much lower than Fed projections of 3.5 to 4.2 percent in 2012[43]. While Fed policy runs risks, so, too, does foregoing opportunities to boost the economy’s recovery.

Furthermore, Bernanke recognizes their arguments, and justifies the Fed’s course of action in response: “Although a long period of low interest rates could encourage excessive risk-taking, and continued close attention to such developments is certainly warranted, to this point we do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery and more-rapid job creation[44].” While he acknowledges that the programs aren’t as powerful as they were during the financial crisis, he believes they are still helping the economy, especially housing, and, most importantly, that the risks are manageable[45].

The most recent jobs report notwithstanding, most economic indicators have been promising as of late. Manufacturing[46], real estate (Freddie Mac posted an $11 billion profit, its biggest ever[47]), and energy (crude oil and natural gas) are all markets boasting strong growth potential. Oil imports going nearly cut in half next year from 2005[48]. Moreover, the Congressional Budget Office predicts that the deficit is now falling sharply. It is projected to shrink to $845 billion this year from $1.4 trillion in 2009, with greater cuts to come in the future from spending cuts and an improving economy that generates more tax revenue and restrains government safety-net spending[49]. And, in what is perhaps the most convincing sign of economic vitality, U.S. households[50] are borrowing again[51] and banks lending again[52]. As the process of Quantitative Easing nears its last year or so, it should consider reducing its balance sheet to reduce startling the market once it cuts its program.

The economy is still recovering. Without viable alternative stimuli to replace the current bond buying stimulus, the Fed should continue quantitative easing. It is fastidiously watching the inflation rate in conjunction with its historical mandates, a fact that must not be overlooked by current criticisms. Another credit crash looks unlikely because most of the private sector has paid down substantial amounts of debt from the 2000s[53]. What is more, the economic data cited within this paper correlate with improving economic conditions. The Fed’s solution may be a highly unorthodox one, but shepherding investors into stocks is so far proving to be advantageous. Figure 1 refers to the stock market surge of recent weeks. It is difficult to assess causation versus correlation here, but it is reasonable to determine that Fed policy has played a role in investors realizing more gains, getting money moving again, and aiding the Federal government in paying down its debt. Expect—and support—a final approximate end-date around June 2015 for the Fed to start slowing its monthly bond purchases, stop buying bonds, and begin thinking seriously about raising short-term interest rates as unemployment reaches 6.5 percent[54].

Figure 1



Letter from the Editor

When I stumbled upon the word “anomie” the other day, I began to copy and paste it into the list of interesting words that is saved on my desktop, as I would any other word I wish to remember. However, the meaning of this word stayed with me for several days as I mentally toyed with its implications, running the gamut of political, historical, philosophical, and social. In what may to controversial to some, I hope to respectfully articulate what I take this word to mean, and whether its meaning is a possible reality in the lives of Americans.

An anomie is social instability caused by erosion of standards and values. It also refers to alienation and purposelessness experienced by a person or class as a result of lack of standards, values, or ideals[55]. Under what conditions could the America ever experience an anomie? Is such a state of affairs farfetched, or could come into existence?

When I think of social unrest, my mind jumps back through the pages of history to raids or rebellions concerning slavery or class inequality, skirmishes due to boundary disputes between Natives or Mexicans, and protests or violent demonstrations, such as the occupy Wall Street movement. Farther away from home, I draw parallels between this definition and the Weimar Republic, in which pre-WWII Germany experienced a profound surge of ideas, technology, and resources which transformed this state into the world’s premier metropolis. The Republic did not endure, however: it withered from its spot atop the world, setting the stage for the Third Reich to take the reins.

While the dissolution of Weimar can in no small way be attributed the pervasive effects of hyperinflation, the degradation of underlying traditional values strikes me as a pivotal cause as well. A cultural renaissance of ultra modernism perceptible in architecture, fashion, and art such as Dadaism led to extreme politics and conservatives’ concern that Weimar was abandoning traditional values. Gender roles were blurred and gay rights were promoted, which some would argue caused the Weimar democracy to crumble due to loss of a stable moral and sexual order. The dearth of state funds resulted in less criminal prosecution and a lax legal system. The potent liberalism of Weimar would ultimately result in a far-right backlash of horrific proportions.

Although not fully intentional, it is obvious I am attempting to associate this period in European history with possible future social structures in America. While I think some lessons from this era can be relevant and informative, I would be wrong to try to make a Procrustean bed out of these countries; that is, fit what I see going on in the United States to the mold of Weimar Germany.

Nevertheless, it appears as though anomie occurred in the Republic. I suppose it is debatable whether the burgeoning progressive movements were correlated or causal, but I maintain that it would be difficult to argue that an underlying social fabric is not crucial to a state’s perpetuity.

As someone with more conservative principles than liberal ones, I struggle to strike a balance between upholding a national system of ideals with the natural social evolution of mankind. More often than not, however, I come out of these mental tussles championing a more conservative social structure. But I see such a structure waning. I see the racial composition of the country changing drastically by 2050. I see greater support for gay marriage and interracial marriage. I see kids getting participation trophies and extra credit for bringing in Boston Market turkeys from students’ part-time jobs. I see students accepted to elite universities due to their skin color’s correspondence with a race quota. I see less and less regard for religion.

Are these things “bad?” Not necessarily. Do they represent an erosion of standards and values? Yes. Is the subsequent anomie bad or dangerous? I’m not sure, although I have my hesitations about deeming it a good thing.

As a rule, I think it is bad for society to transform so much as to be unrecognizable to our Founders, or, perhaps more rationally, my peers’ grandparents, the ones Tom Brokaw immortalized at the “Greatest Generation.” What was it they sought to uphold in WWII? And in the Cold War? The American way of living.

Is it incidental that America is the wealthiest, most powerful nation on earth? Is it by the zephyr’s whimsy that America emerged out of tyranny and then internal struggle victorious and intact? Is it not that exceptional that people from all over the world wish to live, learn, and prosper here? Something had to have birthed America’s triumphs. While it is difficult to ascertain what exactly that is, it is simple to identify what it is not: the changes to our country’s societal landscape over the past 25 or so years.

The reader can say that “erosion’ is too harsh a word, that “evolution” would be more acceptable, or that most soldiers in WWII didn’t even want to fight or were crossing enemy lines for the sole purpose of following orders. I understand these qualms, but I stand firm in my belief that without standing for something as a country, we stand for nothing, and risk losing what makes America great.

I’m unable to use cartomancy to see what America looks like down the road. No one is able to tell our country’s future vis-à-vis these fundamental changes. But there seems today to be an absence of morals and values in American culture. It’s almost as though one isn’t allowed to hold an opinion for fear of offending someone else. The result is conformity to nothing, or, rather, a general appreciation for everyone and everything at the expense of a core set of ideals that forms the foundation of American superiority. Over the past year there have been massacres at movie theaters, marathons, and universities. When I asked my grandma if such atrocities existed when she was my age, she said there were certainly none similar that she could remember. The times probably weren’t halcyon, but I am inclined to think that the stricter morals and more unified American way of life kept society functioning and prosperous.

I hope my position’s candor is not misconstrued as blinkered or hidebound. But in a university setting such as this, where a diversity of opinions and ideas is championed, I believe this editorial contributes to important discussions taking place about American society and its future.

[1] Steil, B. (2013). The battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the making of a new world order. Princeton: Princeton University Press.

[2] Bibow, Jorg (2009). Keynes on monetary policy, Finance and Uncertainty: Liquidity Preference Theory and the global financial crisis. Routledge Press.

[3] Haltom, Renee and Wolman, Alexander L. (2012). A citizen’s guide to unconventional monetary policy. The Federal Reserve Bank of Richmond. Online.

[4] Bernanke, Ben. (2013, February). Speech at the University of Michigan regarding Federal Reserve Policy. Ann Arbor, Michigan.

[5] Sommer, L. (2012, December 8). The next move for the Fed. The New York Times.

[6] Jakab, S. (2012, December 9). Herding cats at the Fed may take awhile. The Wall Street Journal.

[7] Casselman, B. (2012, December 7). Cautious companies stockpile cash. The Wall Street Journal.

[8] Cui, C. and McGee, P. (2013, April 3). Key bond index gets bitten. The Wall Street Journal.

[9] Hilsenrath, J. and McGrane, V. (2013, January 31). No surprise as Fed maintains course. The Wall Street Journal.

[10] Hilsenrath, J. (2012, November 29). Fed stimulus likely in 2013. The Wall Street Journal.

[11] Taylor, J. (2013, January 29). Fed policy is a drag on the economy. The Wall Street Journal.

[12] Lin, C. (2012, November 26). Treasurys face risk of reluctant Fed. The Wall Street Journal.

[13] Editor. (2013, January 31). As contractions go…. The Wall Street Journal.

[14] Sommer, L. (2012, December 8). The next move for the Fed. The New York Times.

[15] Hilsenrath, J. (2012, November 29). Fed stimulus likely in 2013. The Wall Street Journal.

[16] Sommer, L. (2012, December 8). The next move for the Fed. The New York Times.

[17] Greenlaw, D.; Hamilton, J.; Hooper, P.; and Mishkin, F. (2013, March 8). The Federal Reserve’s “fiscal crunch” trap. The Wall Street Journal.

[18] Haltom, Renee and Wolman, Alexander L. (2012). A citizen’s guide to unconventional monetary policy. The Federal Reserve Bank of Richmond. Online.

[19] McGrane, V. and Hilsenrath, J. (2013, January 30). Fed risks losses from bonds. The Wall Street Journal.

[20] Lahart, J. (2013, February 2-3). Wall Street still runs through D.C. The Wall Street Journal.

[21] McGrane, V. (2013, February 28). Fed could slow bond selloff. The Wall Street Journal.

[22] Cochrane, J. (2013, March 4). Treasury needs a better long game. The Wall Street Journal.

[23] Lahart, J. (2013, March 9-10). The Federal Reserve’s job ahead. The Wall Street Journal.

[24] Hilsenrath, J. (2013, March 9-10). Jobs upturn isn’t enough to satisfy Fed. The Wall Street Journal.

[25] Hilsenrath, J. (2012, November 29). Fed stimulus likely in 2013. The Wall Street Journal.

[26] Brenner, R. and Fridson, M. (2013, March 24). Bernanke’s World War II Monetary Regime. The Wall Street Journal.

[27] Hilsenrath, J. and Peterson, K. (2013, January 19-20). Records show Fed wavering in 2007. The Wall Street Journal.

[28] McGrane, V. (2013, February 11). Fed’s Yellen defends stimulus to spur jobs. The Wall Street Journal.

[29] Overheard. The Wall Street Journal February 28, Markets section.

[30] Jakab, S. (2013, January 14). Inflation alarms may signal real threat. The Wall Street Journal.

[31] Melloan, G. (2013, January 10). Deficits, debt, and the fate of the dollar. The Wall Street Journal.

[32] Taylor, J. (2013, January 29). Fed policy is a drag on the economy. The Wall Street Journal.

[33] Cochrane, J. (2013, January 25). A regulatory giant. Hoover Digest, no. 1.

[34] Hilsenrath, J. (2012, November 29). Fed stimulus likely in 2013. The Wall Street Journal.

[35] Cherey, M. (2013, February 6). The diminishing value of “zeroes.” The Wall Street Journal.

[36] Kessler, A. (2013, February 22). When interest rates rise, watch out. The Wall Street Journal.

[37] Cochrane, J. (2013, March 4). Treasury needs a better long game. The Wall Street Journal.

[38] Derby, M. (2013, February 16-17). Two Fed officials weigh bond buying. The Wall Street Journal.

[39] McGrane, V. and Hilsenrath, J. (2013, January 30). Fed risks losses from bonds. The Wall Street Journal.

[40] Barley, R. (2013, January 28). Risk of ultralow yields. The Wall Street Journal.

[41] Greenlaw, D.; Hamilton, J.; Hooper, P.; and Mishkin, F. (2013, March 8). The Federal Reserve’s “fiscal crunch” trap. The Wall Street Journal.

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[52] Contributing writer. (2013, February 20). Suddenly, a flood of business loans. The Wall Street Journal.

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[54] Hilsenrath, J. (2013, March 18). Easy-money era a long game for Fed. The Wall Street Journal.



Peer Critique

Dear Christopher,

I think your project is very thorough and addresses various areas of the problem with social and political movements currently within the United States. It addresses international (military), economic and societal changes that you believe should occur within the next few decades, based on extensive research. You’ve done a lot of writing and you’ve clearly spent quite some time on this project. There were a few clarification issues I had, and perhaps they will be resolved when the final project is placed within the context of your portfolio, but I’ll address them regardless.

In your “Letter to the Editor” I believe you were making a comparison of post-war Germany to the U.S. currently. It seems you have the opinion that Weimar Germany, though facing struggles, was able to develop a system of values and standards among it’s citizens for a more structure social and political environment. I think this letter has many strong theoretical points, but one thing I’d like to see is your ideas rooted in less theory and more definitive ideas. For example, you mention how the U.S. emerged as the wealthiest nation in the world, but what is wealth? Especially in terms of egalitarianism?

For example, Swedish citizens have about 80% unemployment benefits during the recession; they are less prone to depression and on average live 3 years longer than the average U.S. citizen. In this case, the wealth of the nation lies within healthy, happy and cooperative citizens that put the emphasis on distributing wealth more equally among it’s people. My question for you is: what is your definition of wealth? The U.S. produces a large amount of GDP but the gaps between social classes are even greater than they were 20 years ago. I think the question I’m posing for this is mainly: are you focusing on the social or economic aspects of wealth within a nation? I believe that will also help you clarify your argument a little more.

I could not figure out to whom or which group the “Recommendation Looking Ahead” was addressed to. I think that by addressing a specific party will help the reader some of the finer points within the essay, because a lot of the information is in very dense financial/economic language. Within that paper, I also think it may help to add a conclusion paragraph, where you can gather and summarize the general conclusions you draw from this analysis. Also, giving a small glossary of general definitions for words such as bonds, interest rates and inflation will help a wider range of readers understand the lingo. Otherwise, I found it thorough and quite extensive.

Finally, the memorandum was the part of your project I found the most easily understandable and interesting to read. I liked the way you organized it and the inly thing I’d suggest is possibly putting in a conclusion paragraph as well, because ending with “major obstacles” makes the memorandum seem as if the was no finalized agreement drawn upon (other than a proposed solution).

Good luck editing!



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