By John Carney
The "secular stagnation" hypothesis put forward by former White House ecnomist Larry Summers at a recent International Monetary Fund conference—usefully translated as a "permanent slump" by Paul Krugman—is likely to continue to get a lot of attention.
Unfortunately, a lot of this "attention" will be very boring because it will mostly involve economists saying all the same sort of thing they would have said even without the introduction of the concept of secular stagnation.
Economist and New York Times columnist Paul Krugman is already up to it, insisting that one of the main things we need to learn is that "austerity is still bad." Anti-Keynesians, meanwhile, have started to attack the concept because it also strikes them as a justification for Keynesian policies.
A bit of background here is useful.
The concept of secular stagnation is not new. The reason why the fights keep coming around to Keynes is that historically it was very much connected to a Keynesian analysis of the economy which held that it is possible for the economy to fall into a state of economic equilibrium with less than full employment.
(Read more: Fed 'safety net' on stocks is shrinking: El-Erian)
In a 1938 address to the American Economic Association, the economist Alvin Hansen said that secular stagnation was likely in the near because of three factors: (a) the end of the frontier, (b) the end of rapid population increase, and (c) the end of technological change. The coming age of secular stagnation meant, for the Keynesians, that we'd have high levels of unemployment regardless of economic growth unless the government intervened with high levels of spending.
From our perspective, it's quite obvious that secular stagnation didn't happen.
It's obvious, really, that the very causes of secular stagnation didn't happen. Americans continued to move west and began to suburbanize, so the "end of the frontier" concept didn't hold. We had a post-war baby boom, destroying the population thesis. And, perhaps most obviously, technological change took off rather than coming to an end.
But this wasn't obvious at the time. As the economist Robert Fogel showed in a 2005 paper, Hansen's speech led to a tidal wave of academic work on secular stagnation that lasted until 1960—well past the time when it should have been obvious to most people that the core elements of the original secular stagnation thesis were totally wrong.
In fact, there continued to be an active discussion of secular stagnation throughout the '60s, '70s and early '80s.
One of the reasons for the persistence of the original wave of the stagnation thesis was that it was very deeply rooted in Keynesian concerns about excessive saving and gave strong support to large government spending programs to make up for the "demand leakages." It helped explain why private investment and consumption could fall in a way that Keynes never did. Economists of a more conservative bent, of course, hated the concept for these very same reasons.
(Read more: How US aims to boost growth: Commerce secretary)
To take it to an even deeper level, in many ways the old fight about secular stagnation turned on the question of economic stability. If you think a capitalist economy prone to an inherent instability and mass unemployment, then you wound up a Keynesian. If you thought capitalism basically worked, then you were something else.
And this brings us back to what is threatening to make the revival of secular stagnation so unnecessarily boring.
The Keynesians are preparing to duke it out with the anti-Keynesians on the same old grounds once more. So we have Krugman lining up with Summers, while Tyler Cowen and Arnold Kling argue that secular stagnation doesn't even make sense. I liked this better when it was a music video.
I say that this fight is "unnecessarily boring" because there's no need to have it on these grounds at all. This time around it's very possible that both sides are right. We might have secular stagnation but that might not be the fault of the instability of capitalism.
A far more interesting conversation to have would be around the possibility that this time secular stagnation is real and debating the causes and possible solutions.
The pieces of evidence that Summers marshals in favor of the stagnation hypothesis make a pretty strong case for the concept. We do seem to only be able to generate full employment in asset bubbles; inflation has been a non-issue for generations; our recovery has been pathetic and has stuck us with high unemployment.
(Read more: There's a long way to go before Fed raises rates)
I suspect that part of the explanation for this has been the long-term stagnation of wages in the United States.
High levels of demand could only be supported while wages stagnated by asset bubbles and credit expansion. Neither of these could go on forever because eventually the cost of servicing the debt became excessive and people lost confidence that asset prices would rise to make up for lost income.
But this doesn't have to lead us to a critique of capitalism as unstable or unable to support full employment.
You can be a roaring free-marketeer or just an agnostic on the question and still say that the actual system we have—that is, the mixed economy of fiat money, central bank credit expansion, ever-expanding government regulation, increasingly consolidated financial institutions and a tax code from hell—might be unstable and produce inadequate wages, employment and aggregate demand.
A medical marijuana dispensary in Central City, Colo.—a small gambling town nestled in the mountains near Denver—just became the first business in the United States licensed to sell marijuana to patrons without a note from their doctors.
Erin Phillips, the co-founder of medical marijuana chain Strainwise, announced this week that the Colorado Department of Revenue's marijuana enforcement division accepted the company's application for a recreational marijuana license on Nov. 15. She told CNBC on Friday that industry insiders estimate business can triple with the new license.
"We've done all kind of internal projections," Phillips said on "Squawk on the Street." "It's hard to say since nothing like this has ever happened before."
The store, called The Annie's, will begin to sell recreational marijuana on Jan 1, and should expect plenty of out-of-state traffic. In-state customers can buy up to an ounce of marijuana each day while Annie's will limit out-of-state patrons to a quarter-of-an-ounce each day.
Colorado and Washington became the first states in the U.S. to allow recreational marijuana use last year, and Colorado voters recently approved a 25 percent tax on recreational marijuana.
Phillips told CNBC that she believes recreational marijuana can bring in half-a-billion dollars in taxable income to the state, despite a lower number of medical marijuana dispensaries applying for recreational licenses than first expected.
"The license process is very similar to what it was for medical marijuana," Phillips said. "We basically had to go through an extensive application process at both the state and the local jurisdiction level."
Recreational marijuana outlets cannot sell to customers younger than 21. The legal age for medical marijuana is 18. That meant The Annie's has had to revamp its customer screening process before the new year.
"Internally, that has caused us to put different security measures in place," Phillips said. "All of my staff have had to been trained similar to how bouncers are trained in bars to check for fake IDs. We also had to install magnetic ID readers to make sure that they're not fake."
(Read more: Astrodome doomed, Colorado schools go to pot)
The company's recreational license comes as the U.S. grows increasingly more lax toward marijuana use and enforcement. Twenty states now allow medical marijuana use. Colorado is the only state that allows growers to sell recreational marijuana directly to consumers.
JPMorgan Chase has reached a record $13 billion settlement with federal and state authorities to resolve claims over the bank's sales of mortgage-backed securities that collapsed during the U.S. housing crisis.
It is the largest settlement ever between the Department of Justice and a corporation, and marks a key chapter for the crisis. But the deal does not affect an ongoing criminal probe.
The settlement announced Tuesday requires JPMorgan to pay $9 billion and provide $4 billion in consumer relief, including principal reductions and other mortgage modifications for homeowners facing foreclosure.
The bank said it committed to completing all of those consumer measures by the end of 2017.
New York Attorney General Eric Schneiderman, who sued JPMorgan in 2012, says the state will get $613 million in cash and about $400 million in relief for struggling homeowners.
A settlement has been expected for weeks but was held up repeatedly by disputes, including the tax deductibility of the deal and whether the bank would be absolved of criminal liability.
The on-again, off-again talks were seen at risk of collapse late last month but got back on track a few weeks ago.
At one point JPMorgan CEO Jamie Dimon went to the Justice Department to negotiate personally with Attorney General Eric Holder.
Last week the bank also agreed to a separate, $4.5 billion, settlement with mortgage investors.
By Mike Snider
Sony's PlayStation 4 is off to a hot start. Consumers in North America bought more than 1 million PS4s within the first 24 hours of the new $399 home video game console going on sale Friday. That's the fastest start for a PlayStation system so far.
Shuhei Yoshida, president of Worldwide studios for Sony Computer Entertainment, posted the news on Twitter Sunday.
As often happens when a mass release of a high-tech product occurs, a few consumers get a lemon. Some PS4 owners reported that their new console would not output video and had a flashing light, entertainment news site IGN.com reported.
"A handful of people have reported issues with their PlayStation 4 systems," Sony said in a statement to IGN. "This is within our expectations for a new product introduction, and the vast majority of PS4 feedback has been overwhelmingly positive. We are closely monitoring for additional reports, but we think these are isolated incidents and are on track for a great launch."
(Read more: 10 must-have games this holiday)
And the highly publicized release of PS4 attracted the attention of some thieves. Two men were arrested in Bakersfield, Calif., after robbing a customer of a PS4 outside a store, Yahoo News reported. And in Hutchinson, Kan., thieves broke into a home and took a PS4 in the early morning hours Saturday.
Sony will release the PlayStation 4 in Europe and Latin America on Nov. 29 and in Japan on Feb. 22, 2014.
By Chris Woodyard
As new-car buyers flood showrooms, used car prices are hitting a four-year low, according to an analysis released Wednesday.
Prices may go even lower next year as more new-car buyers trade in their jalopies and more used cars with expiring leases show up on lots.
The average used car sold for $15,617 at a franchised dealership in the third quarter, the lowest since the same quarter in 2009, when they averaged $14,808, according to the analysis by car-pricing website Edmunds.com. Prices have been easing for most of the year, and the third-quarter average was down 2.8 percent from the second quarter and 0.9 percent from the same quarter last year.
Another used-car price watcher, Tom Kontos of Adesa Analytical Services, noted a tiny uptick in wholesale prices in October, but says the overall trend is down.
Why prices are dropping:
"There was a big rise in leases," says Richard Arca, senior pricing manager for Edmunds.com. Now, "we're seeing the result."
Arca cautions, however, that used-car prices still aren't as low as they dipped a decade ago. Prices of some late-model used cars still are so close to the price of a new car that it might make more sense to buy new, he says.
(Read more: Nissan's big drive for global growth)
Kontos notes, too, that there hasn't been "a dramatic decline in used-car prices or a flood of used cars on the market" because of the gradual nature of the recovery.
Look for more declines he says.
"The used-car market, in terms of pricing, is poised for further softening," Kontos says. He predicts even more cars will be pouring into the used-car market, making them all cheaper.
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