Friday , January 15 2021
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Not an election post

Summary:
A number of newspapers in the Tribune syndicate have printed my new piece on Biden’s path forward. In the article, I mess with progressives by quoting Keynes: “(The) NRA, which is essentially reform and probably impedes recovery, has been put across too hastily, in the false guise of being part of the technique of recovery.” . . . Of course, many progressives will not be pleased with my suggestion to prioritize recovery over reform. But as Keynes pointed out in his 1933 letter, a strong economy is the best way to create the political capital required to pursue a reform agenda:“It will be through raising high the prestige of your administration by success in short-range recovery that you will have the driving force to accomplish long-range reform.” David Beckworth has a

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A number of newspapers in the Tribune syndicate have printed my new piece on Biden’s path forward. In the article, I mess with progressives by quoting Keynes:

“(The) NRA, which is essentially reform and probably impedes recovery, has been put across too hastily, in the false guise of being part of the technique of recovery.”.

Of course, many progressives will not be pleased with my suggestion to prioritize recovery over reform. But as Keynes pointed out in his 1933 letter, a strong economy is the best way to create the political capital required to pursue a reform agenda:

“It will be through raising high the prestige of your administration by success in short-range recovery that you will have the driving force to accomplish long-range reform.”

David Beckworth has a set of tweets discussing the Fed’s new average inflation targeting policy. Richard Clarida points out that it’s basically Bernanke’s temporary PLT, which starts from the date when you first hit the zero bound. This is essentially what I said right from the beginning. So either the Fed succeeds in getting inflation to average 2% or we have zero rates for ever, as in Japan. I’d guess that they achieve 2% (on average) by 2030.

David also points to a Jim Bullard speech that says AIT is sort of like NGDPLT:

Not an election post

PS. Did I ever show you my license plate? 🙂 🙂 🙂


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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".

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