Tuesday , June 2 2020
Home / S. Sumner: Money Illusion (page 2)
The author Scott Sumner
Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

S. Sumner: Money Illusion

Amoral familism in America

Dysfunctional societies tend to be tribal, and the strongest form of tribalism is family bonds. Leaders of dysfunction countries often use family ties to get around term limits. (Term limits are a method for reducing corruption.) When I was young, I recall some governors in the Deep South using their wives to get around fixed term limits. You also see this technique used in some highly corrupt countries in the third world.As the US becomes more and more like a banana...

Read More »

The wisdom of Larry Summers

Tyler Cowen directed me to a recent interview with Larry Summers: The real crime is not that we miscalibrated on some economic versus public health trade-off. The real crime is that we have not succeeded in generating far greater quantities of testing, far greater mechanisms for those 40 million unemployed people to do contract tracing, far more availability of well-fitting, comfortable, and safe masks, and that we’re under-investing in the development of new therapeutics and...

Read More »

Occam’s Razor and Chinese conspiracy theories

Conspiracy theories are a powerful drug, as Penn Jillette once observed (in a Joe Rogan interview.) So powerful that people rarely stop to consider how implausible many of the claims actually are.Let’s start with the conspiracy theory that China initially covered-up the severity of the pandemic. There’s actually some truth in the theory (as I’ll explain later), but first let’s consider the implausible lengths to which some push the conspiracy theory. China first admitted...

Read More »

The importance of level targeting

I have a new podcast interview with David Beckworth. In the interview I keep bringing up the importance of level targeting. My fear is that the Fed will eventually get there, but fail to announce the policy in advance. Most of the benefit from level targeting comes from the initial announcement effect, not from the subsequent attainment. Tags:      

Read More »

Revisiting the mistake

Back on April 4, I made this claim: I also predict that in a month or two, when we have a good grasp on the likely death totals from this epidemic, or at least this wave of the epidemic, there will be news stories showing how many of those deaths could have been prevented merely by starting the social distancing at the national level at the same time it was done in Washington (which was about 2 weeks earlier). And the numbers will give you a sick feeling in the pit of your...

Read More »

We have nothing to fear except a lack of fear itself

Lots of people are scratching their heads about the relative strength of the stock market. By that I mean strength relative to the underlying economy, where unemployment is probably about 20%. The election odds favoring Trump are another mystery.This twitter thread by Ryan Booth suggests the virus may be almost gone by the end of August. I won’t say I “believe” this, but I also don’t see any reason to assume he’ll be wrong. Here’s part two of the thread. Now of course...

Read More »

Not your grandfather’s depression

Follow-up to my previous post: Suppose that in 2019 I had told you that during the spring of 2020 America would plunge into the deepest depression since the 1930s. Would you have expected to see this news story in late May? Walmart said “unprecedented demand” for essential products during the pandemic had caused its sales to spike as the world’s biggest retailer disclosed it had taken on 235,000 workers in the US to cope with the surge.Sales of toilet rolls, surface...

Read More »

How this recession might be different

The following are not predictions, rather indications of how this recession (actually depression) might be different:1. Length: The shortest recession that I can recall was in 1980, and lasted for 6 months. Some economists believe the economy bottomed in April, which would make this a 2-month recession. Even a May bottom would represent an unusually short recession.2. Unevenness: With appropriate monetary policy, we should see many booming industries. I’m not saying this...

Read More »

On selective outrage

I have consistently criticized authoritarian regimes all over the world—in Russia, China, Vietnam, Turkey, India, the Philippines, Saudi Arabia, North Korea and elsewhere. I also criticize the US government for aiding and abetting foreign atrocities, and Trump in particular for frequently praising foreign despots while mocking our democratic allies. In contrast, many of my critics have a very selective sense of outrage. While they share my criticism of the Chinese...

Read More »

Why Kerala matters

It has proven surprisingly difficult to explain regional variations in Covid-19 prevalence. Whenever you find one factor that seems important, a counterexample crops up. Vietnam is one of the big success stories, with the nation of 97 million people not having reported a single fatality. Even if a few cases were missed, that’s pretty impressive. But the explanation for that success is over-determined. A young population? Tropical weather? BCG vaccine? Effective...

Read More »