Mike Konczal on the importance of monetary policy
From The New Republic:
It is important that liberals engage conservatives on monetary debates. Since the 1970s, liberals have entirely ceded this aspect of the economic agenda. Even now, calls from the left for more monetary action gain only a fraction of the support of arguments for fiscal stimulus. But the left needs to realize that there is no neutral position in monetary policy””even if President Obama’s jobs plan is passed, its effects can easily be canceled out if the Federal Reserve caves to the singular pressure being applied to it by inflation hawks. (Italics added.)
And that would reduce the fiscal multiplier to zero, wouldn’t it?
Good article. The only change I’d make is to; “if the Federal Reserve continues caving to the inflation hawks.”
HT: Patrick Sullivan
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23. September 2011 at 19:35
If the monetary policy can cancel fiscal policy then fiscal can also cancel monetary. This works both ways. So monetary multiplier is zero. QED.
23. September 2011 at 20:39
Excellent post by Scott Sumner, but this public debate is shaping up exactly as I fear: To be “conservative” means you are for tight money (regardless of time or place) and to be “liberal” means you are wishy-washy, weak and favor easy money, or are entirely clueless.
The market monetarists must constantly assert that they are conservative, and Milton Friedmanites, and do not favor reckless federal fiscal outlays, or structural impediments. But there are times that an aggressive, confident Fed is needed, and now is one of those times.
And please do not concede the strong language to the inflation-fetishists.
They are not “inflation hawks,” they are inflation-fetishists or Chicken Inflation Littles. They are hysterical about inflation. They would kill a robust strong economy to preserve the value of paper money in monetary formaldehyde.
The pro NGDP-targeting crowd will never win this debate if we concede the high moral ground and language to the inflation-festishists. There is no inherent moral value in zero inflation (if that could even be measured). There is high moral ground in robust economic growth.
23. September 2011 at 22:00
A lot of progressives have actually been trying to engage liberal monetarists like Yglesias and Konczal in debate on monetary policy, and on the relative amounts of political energy and attention that should be invested in focusing on central bank policy, as opposed to advocating for fiscal activism. They keep up the monetary policy advocacy, but don’t always seem interested in explaining in clear and plausible terms what they are trying to accomplish.
Yglesias writes column after column in which he calls for various broadly specified “actions” and “targets” from the Fed, but he is extremely vague on the causal mechanisms and institutional means he believes to be at work, the specific economic phenomena he wants the Fed to directly engineer, and the bearing of these directly engineered phenomena on the broader and more remote consequences he hopes these actions to achieve. Compared to a lot of his other economic punditry, which is clear-headed and practical, his monetary policy advocacy is vague and mysterious in direct proportion to the passion with which he promotes it.
A lot of us don’t believe the Fed effectively controls the “money supply”, or has the ability to hit full employment targets or growth targets – no matter how many legislators piously deem the hitting of such targets as part of the Fed’s mandate. We think the real economy is much more independent of central bank behavior than the monetarists think it is. We think QE and QE2 weren’t very important, and that the increasingly convoluted behind-the-back monetary policy bank shots the monetarists keep proposing won’t have much impact either, accept in re-arranging the deck chairs and in the financial and trading community.
As far as I can tell, Matt thinks Fed powers are virtually unlimited, and that if there aren’t enough rainbows and unicorns in America, that’s because there the Fed is irresponsibly failing to target the right rainbow and unicorn levels.
Progressives also tend to believe that the Federal Reserve is an inherently undemocratic and conservative institution, and so that its powers should be limited. We also tend to think the financial sector is far too large, and a wasteful value sink and source of socially unproductive rent-taking. There are a variety of progressive proposals out there for limiting Fed powers and restoring monetary policy to the political branches, for limiting the power of banks and other financial institutions, for shrinking the financial sector and for more effectively integrating fiscal and monetary policy so as to make it easier for the government to fight recessions with fiscal expansion not funded by debt. Yglesias keeps lecturing progressives for not paying attention to monetary policy. But when we do just that and bring up these alternatives, he doesn’t show any interest in talking about them, much less debating them.
If monetary expansion were more closely integrated into and guided by fiscal operations, then maybe we could get some of those vaunted “helicopter drops”. Congress and the Treasury actually have the ability, if they deign to exercise it, to spend new money directly into the economy in the places of their own choosing, where it can go right to work generating consumption, production, exchange and employment. All the central bank can do is target interest rates, and trade new money for other financial assets. And in the current environment those new monetary assets just seem to sit where they are, doing as little economic work as the other inert assets for which they were traded.
That’s not surprising, since the foundation of our economic sluggishness is not “tight money” but a dearth of real economy opportunity and growth potential among a few hundred million enterprising but beaten-down and ransacked American workers, consumers and business-people. Monetarists are weirdly obsessed with trying to force-feed economic vitality out into the world of consumption, trade and production through the passageways of the banking channel. It’s not happening. The problem is what’s going on out on the street, on the other side of the bankers’ door.
When it comes to economic institutions and economic policy, Yglesias just seems to have fairly conservative and unimaginative views, and so it’s no wonder that lots of progressives aren’t much moved by his proposals and entreaties.
24. September 2011 at 01:25
A lot of confusion in Dan Kervick’s comment, so here’s a full reply:
“Compared to a lot of his other economic punditry, which is clear-headed and practical, his monetary policy advocacy is vague and mysterious in direct proportion to the passion with which he promotes it.”
So you’re complaining about MP being more “vague and mysterious” than other branches of economics? You may well be right–and it’s something market monetarists are trying to fix–but this has no bearing on the cogency of Yglesias’ arguments.
“A lot of us don’t believe the Fed effectively controls the “money supply”, or has the ability to hit full employment targets or growth targets … ”
Right, the Fed can’t directly targey employment shares or real growth. They _can_ target a monetary aggregate or a nominal anchor (e.g. the price level path or NGDP path).
“We think the real economy is much more independent of central bank behavior than the monetarists think it is.”
You’re almost certainly wrong. Sorry to be blunt, but it’s hard to explain data such as [1] or [2] without assuming that the real economy can be affected by nominal changes caused by central bank behavior.
“We think QE and QE2 weren’t very important”
Perhaps you weren’t paying attention. When QE2 was announced, the market reaction was vey clear. The dollar went down, stocks and commodities went up, inflation up, bonds down. Altogether, the moves were strongly consistent with an increase in expected AD.
“and that the increasingly convoluted behind-the-back monetary policy bank shots the monetarists keep proposing won’t have much impact …”
The Fed’s initiatives are growing more “convoluted” and less effective because they’re trying to stimulate AD without creating more money and expanding their balance sheet. The monetarists are criticizing this trend; they’re not behind it.
“Progressives also tend to believe that the Federal Reserve is an inherently undemocratic and conservative institution, and so that its powers should be limited. …”
You may be right: for instance, it’s not clear why a single agency should address both monetary policy and bank regulation. But political influence on monetary policy should be limited to setting long-term goals; any “integration” with fiscal policy would be risky and unnecessary:
“Congress and the Treasury actually have the ability, if they deign to exercise it, to spend new money directly into the economy in the places of their own choosing, where it can go right to work generating consumption, production, exchange and employment.”
You’re confused. The Fed spends new money into the economy whenever they conduct monetary policy. That money is either exchanged away (‘generating consumption, production, exchange and employment’, as you put it) or hoarded for liquidity/store of value (in which case the Fed has successfully monetized some asset, and can go on to create more money). There’s no need for further government involvement.
“That’s not surprising, since the foundation of our economic sluggishness is not “tight money” but a dearth of real economy opportunity and growth potential”
The dearth of economic opportunities and growth is caused by an AD shortfall. Too little money (nominal spending) is chasing too many goods, and prices are slow to adjust. So opportunities for production fall.
“Monetarists are weirdly obsessed with trying to force-feed economic vitality out into the world of consumption, trade and production through the passageways of the banking channel.”
Monetarists are not “obsessed with the banking channel”, unlike Ben Bernanke and many macro-economists. The Fed can ‘spend money directly into the economy’ by purchasing assets (such as bonds, forex or mortgages). If QE1/QE2 is any guide, such actions will increase expected AD and bring us closer to full-employment output.
24. September 2011 at 02:43
anon:
Please take credit for your excellent comment.
24. September 2011 at 04:22
anon…
Dan Kervick raises a valid point on the interjection of new money into the economy. Joe Gagnon has effectively raised this point too. It is not at all obvious, under present conditions, if giving that money to bondholders in exchange for t-bills is the best way to spend it. Also, note that to the degree that we ARE in a liquidity trap, and banks are holding massive excess reserves, then swapping 400 billion in 3 month notes for the same in 20-30 year maturities is much like conducting QE on long term maturities.
Scott would argue that it’s different, however. I agree. But it’s not so obvious WHY it’s different, and what that means. We could do a better job explaining it.
Anti-monetarists are correct that we should specify our mechanisms of action a little better. Scott has done so – and much of has to do with the expectation of permanence in monetary interjections. Unfortunately, the Fed’s behavior suggests that they are not committing to permanence, but rather “minimum duration until things get better enough we can exit”.
If the Fed were to commit to holding the 30 year bonds for 30 years, then that is effectively monetizing much of the interest payments on that bond (and/or monetizing the decrease in value over 30 years that would result from inflation). One of the major problems on OUR side of the debate, is that most “monetarists” fail to differentiate between liquidity and other effects of the money supply (notably, money as store of value).
Anyway, your responses to Dan’s other points are well stated. Among other things, surely some part of the recession IS real, but the response to those real shocks is massively suboptimal due to the way money supply is being handled.
24. September 2011 at 05:01
StatsGuy, you’re correct that if money and short-term T-Bills are fully interchangeable, then Op Twist should count as monetary easing. Bill Woolsey has raised this point on his blog, and I’d like Scott to address it as well.
One possibility is that money and T-Bills are less equivalent than is generally assumed, even in a liquidity trap. Or perhaps Twist was indeed effective on its own, but its impact had been fully priced in well before the September meeting.
I’m not really sure that “permanence” in money injection is such a big deal. My assumption is that, given an appropriate nominal target, the increase in monetary base could turn out to be permanent, even though the Fed did not expressly state permanence as their goal.
24. September 2011 at 06:18
OhMy, No it doesn’t because the fiscal authorities would run out of money long before they could come close to canceling monetary policy.
Ben, Good observations.
Dan, Before you criticize monetarism you need to learn a bit more about it. No offense, but your entire long comment is based on one misconception after another. Let’s start here:
“Monetarists are weirdly obsessed with trying to force-feed economic vitality out into the world of consumption, trade and production through the passageways of the banking channel.”
Completely wrong. We have no interest in forcing consumption, and I have zero interest in the banking channel. We are trying to control AD. I thought all progressives agreed AD drove the business cycle. Isn’t that the standard liberal view? Then the question is whether monetary policy can influence AD. No one thinks the Fed can magically control real variables. We think they can control nominal spending (not consumption!) and that changes in nominal spending will influence real GDP if we have slack, but will simply result in inflation if we are at full employment. Since there’s currently slack, we believe more AD right now would boost employment.
Both monetary policy and fiscal policy influence AD. The difference is monetary policy is far cheaper and far more powerful.
I find it amusing that you view Yglesias as a conservative. You do know that he favors a greatly expanded welfare state, don’t you? And almost all the standard left wing policies in health care, environment, human rights, foreign policy, etc. It’s just he talks about these issues in a more sensible and rational way than most pundits. Perhaps that’s what makes him seem “conservative.”
anon, Very good post, you saved me time.
Statsguy, You said;
“Dan Kervick raises a valid point on the interjection of new money into the economy. Joe Gagnon has effectively raised this point too. It is not at all obvious, under present conditions, if giving that money to bondholders in exchange for t-bills is the best way to spend it. Also, note that to the degree that we ARE in a liquidity trap, and banks are holding massive excess reserves, then swapping 400 billion in 3 month notes for the same in 20-30 year maturities is much like conducting QE on long term maturities.”
A few comments.
1. “Spend” is a strange term, as that implies a cost to the program.
2. You talk as if QE is the preferred monetarist policy. We favor NGDP targeting, which would be far more effective. Even price level targeting would be far more effective. Whether adding money helps depends entirely on whether the Fed tells us it’s temporary or permanent. Monetarists agree that temporary injections don’t help.
3. I did my PhD dissertation on money as a store of value, so I don’t think I ever ignore that role in my monetary analysis.
24. September 2011 at 07:25
The dollar went down, stocks and commodities went up, inflation up, bonds down. Altogether, the moves were strongly consistent with an increase in expected AD.
And this might be important, anon, if you are a stock, bond or commodities trader. But employment has barely changed. Few companies actually saw growing revenues; some companies increased profits, but mostly by cutting costs. We’re stuck in the mud.
Right, the Fed can’t directly targey employment shares or real growth. They _can_ target a monetary aggregate or a nominal anchor (e.g. the price level path or NGDP path).
I don’t see how the Fed can target any aggregate level of total spending, whether that spending is measured in real terms or current dollar terms. The Fed can do things that marginally influence spending behavior, but I see little evidence that it makes sense for the Fed to adopt a spending level target. Of course, if they do adopt NGDP as an explicit target, I suspect they would fail to hit it. As a result, economic agents would take even less interest in what the Fed says than they do now. That would be fine with me personally, as it would hasten the end of the reign of monetarism, but I imagine that is a social effect monetarists would want to avoid.
Yglesias and the market monetarists seem to think that increasing inflation expectations in the current environment would have salutatory effects. I’m dubious. Both actual inflation and expectations of inflation have a variety of effects, some good, but many bad. Some relatively sophisticated borrowers become more willing to borrow. Most lenders become less willing to lend. Consumer behavior is likely to be negatively affected. Consumers only sustain current spending levels in an environment of rising prices if their nominal incomes rise in proportion to the price changes. That is extremely unlikely to happen when we have double-digit real unemployment. Companies will continue to take advantage of the buyers’ market for labor to keep nominal wage velocity low. As a result, both real inflation and the expectation of inflation will only increase consumer stress and insecurity. Similarly, the gains that might be effected by a reduction in the real value of principle balances will be offset if nominal wages remain stagnant.
It also seems to me that this whole business of attempting to manage inflation expectations from the central bank is a mug’s game. We have just seen several years now where the actual CPI has been very low. But during the whole time there has been a very sizable contingent in the population who believe that inflation is high, and that hyperinflation is just around the corner. That’s one reason so many people have chosen to “invest” what they have in extremely low-risk inflation hedges. Expectations have a mind of their own, and are predominantly determined by endogenous economic factors that have little to do with pronouncements and actions by the central bank.
You’re confused. The Fed spends new money into the economy whenever they conduct monetary policy. That money is either exchanged away (‘generating consumption, production, exchange and employment’, as you put it) or hoarded for liquidity/store of value (in which case the Fed has successfully monetized some asset, and can go on to create more money). There’s no need for further government involvement.
Well look, anon, isn’t that the point? All this new base money is doing is sitting in bank reserve accounts at the Fed. In my book, that is not spending. If the money is instead either used to directly purchase a good or service, or at least given to people with a much higher propensity to either spend it right away on goods and services, or invest it in something productive, then the new money is actually doing some work to create value and economic activity. Monetizing financial assets, and then sitting back and praying the the gods of finance deign to do something useful with the money – when obvious fiscal alternatives are right in front of you – seems like a weirdly passive and backward approach to generating economic activity.
Monetarists are not “obsessed with the banking channel”, unlike Ben Bernanke and many macro-economists. The Fed can ‘spend money directly into the economy’ by purchasing assets (such as bonds, forex or mortgages).
OK, the banking and financial channel. In any case, you’re all about financial assets and the flow of funds on the credit supply side. What we need is direct support for production, employment and consumption.
I can see that you have a generally negative attitude about direct government action, and are risk-averse when it comes to ideas for closer integration of fiscal and monetary authority. And that’s not surprising coming from the generally conservative representatives of the monetarist tradition. But you can see why sometime progressives like Matt Yglesias are not going to get much traction when they become so invested in this fundamentally conservative approach to economic policy.
24. September 2011 at 08:05
No one thinks the Fed can magically control real variables. We think they can control nominal spending (not consumption!)
Scott, please just tell me how. I recently read your paper on NGDP targeting, and the whole time I was waiting for the “How” part to start, but never saw it.
If nominal spending goes up during some period, then doesn’t that mean that either real spending has gone up during that period with the price level constant or the price level has gone up during that period with real spending constant or some combination of the two has occurred? If the engineered increase is due to an increase in the price level alone, then the economic effects are likely only to be the generally mixed effects of inflation that I discussed in my response to anon. If you expect the engineered increases to be due in part to increases in real spending, however, then it appears you think the Fed can engineer increases in real spending after all.
And if not through the channel of banking, how exactly does the Fed exert its influence over economic agents? The Fed is just a really big bank, with special money creation privileges, but statutorily very limited means of employing the money it creates. It stands at the apex of the banking system, and its influence over the economy is primarily exerted via its impact on its member banks, and other actors in the finance system. Monetarist ruminations since at least the time of Hume are full of entertaining and interesting thought experiments on the effects of some fictional monetary authority increasing the money supply by having fairy armies of night visitors put newly minted money in people’s pockets, etc. But actual central banks don’t work that way and don’t have that power.
Do you really believe the Fed can “control” nominal spending? They can’t even control the price level. I know monetarists are fully aware that the influence of money creation on the price level comes not just from the existence of the new money, but because that new money then “chases” goods. Hasn’t recent experienced convinced them by now that you can lead a new dollar to a bank account, but you can’t make it chase?
24. September 2011 at 09:58
I want to thank Dan for vindicating the prediction I made when I linked to the TNR article in a prior post.
24. September 2011 at 11:28
That’s a very well thought out response Patrick.
But I’m glad I was at least able to fulfill somebody’s expectations. Maybe I should adopt a policy of level targeting the monetarist disappointment rate. I’m sure I can hit it as long as I articulate my goal with a sufficient degree of conviction and adopt an authoritative tone.
24. September 2011 at 13:16
Dan Kervick:
Please read Paul Krugman on vulgar Keynesianism: http://www.pkarchive.org/cranks/vulgar.html
I love how, like Scott, he turns to an analogy with driving a car at the end. He does explain it wrong — interest rates are not necessarily the causal mechanism for converting nominal growth to real growth. But he does point out that “doubling the money supply” is what matters. And ultimately, as Krugman says:
“Indeed, if you want a simple model for predicting the unemployment rate in the United States over the next few years, here it is: It will be what Greenspan wants it to be, plus or minus a random error reflecting the fact that he is not quite God.”
24. September 2011 at 13:57
Well, johnleemk, I think it’s fair to say that the Krugman of 2012 no longer sounds a lot like the Krugman of that very old review. But in any case, I have said before that the main influence the Fed really does have – at least during more ordinary times with more normal interest rate regimes – is through the interest rate channel. It’s mainly just a big and powerful bankers’ bank. Monetarists, as I understand them, pooh-pooh the importance of interest rate manipulations, since they believe everything important is a “monetary phenomenon.”
24. September 2011 at 14:47
Dan Kervick, thanks for providing a nice caricature of monetarist and anti-monetarist views. Of course, montarists have endeavored to explain why the Fed is best seen as _nothing like_ a big bank, and why focusing on the institutional workings of the monetary authority can be misleading.
Scott has addressed this issue in response to MMT views, but a summary blog post couldn’t hurt.
24. September 2011 at 15:03
Dan, BTW. responding to a few of your earlier points:
About unemployment after QE2, you raise an interesting question. ISTM that the economic outlook was slowly improving after QE2, but it’s hard to find compelling data. Unemployment is a “lagging indicator” of economic conditions, so one would expect to wait two or three quarters before seeing any real improvement.
Your points about “good” and “bad” inflation have been addressed by Scott in his response to Cowen, and I will defer to that response. The political economy of inflation can be very tricky, because folks hate “inflation” (rather, purchasing power declines) for all the wrong reasons.
Of course, high inflation has never been around the corner according to market expectations. Perhaps some folks bought gold as a hedge (and got lucky as long-term interest rates fell) but even that is more driven by tail risks which we can’t do much about.
About attitudes towards government intervention: it’s not just conservatives who are skeptical of govt involvement in a distressed economy: many liberals are as well. J. M. Keynes was very clear in his General Theory that his policy proposals were intended as a _market-based alternative_ to such things as sweeping nationalizations, centralized wage setting and other radical policies. Of course, similar attitudes are unfamiliar to us after the Cold War standoff of the 1950s and the neoliberal revolution of the 1970s.
Essentially, we can all agree that government is comparatively “bad” when the economy is at potential, though of corse we disagree at the margin. So it sounds strange to advocate major changes in policy during a recession, _when better solutions are available to restore full output._ It’s hard to explain the appeal of such proposals, except as a fairly crude anti-market bias.
24. September 2011 at 16:46
anon, thanks for your thoughts. Just a few thoughts on the public sector vs. the private sector.
I believe private markets and private enterprise do a generally fine job in generating prosperity and organizing economic activity so long as they are well-regulated, and should always be the main engine of our economy. But they are prone, in my view, to certain pathologies and diseconomies that need to be prevented by government regulation from occurring in the first place, and need to be counteracted by government action when they do occur. Chief among these are the pathologies of the credit and risk management markets, and maldistributions of income, phenomena which I see as inherent in the market system itself, and that tend to drive a healthy system into bouts of collapse and self-destruction. I believe these problems can be addressed successfully, not by repudiating markets, but just by better-regulating them.
It is important for the public to retain ownership over certain man-made goods and natural resources of great public value, both to secure them against the ravages of unrestrained exploitation and enterprise, and to prevent control over the key sources of the democratic community’s wealth and power from shifting into the hands of private ownership. But because there are very important things owned by the public, that means only governments can invest to improve these goods when work on them needs to be done. Such work always needs to be done, and work of that kind provides an excellent opportunity for expanded government expenditure and employment during private sector downturns.
Employment increases are seen as a lagging indicator of economic activity because of specific public policy choices we have made, not because of the inherent nature of the relationship between employment and economic activity. An activist public sector could maintain a permanent, stabilizing employment program that absorbed workers during private sector downturns and released them back to the private sector as private economic activity picks up. With such a program, unemployment as we know it would barely exist, and government hiring, and the security and income support it provides, would actually drive private sector recovery. Hiring would not lag behind recovery.
I also personally believe we should get private sector employers out of the business of health care insurance provision, and move health care insurance into the public sector. One of my main reasons for this policy preference is that it appears to me that health benefits are creating a huge extraneous per-worker expense which is a drag on the labor market.
25. September 2011 at 06:39
“It is important that liberals engage conservatives on monetary debates.” Why would this be important? Oh yea, because currently CONSERVATIVES ARE OVERWHELMINGLY WRONG ON MONETARY POLICY.
That is the key unstated assumption. If conservatives were right – that current monetary policy is appropriate or even needs more tightening – then there would be no called for liberals to engage. It is only because conservatives are overwhelmingly and spectacularly WRONG on monetary policy that this is an issue.
It is the monetarists – the self proclaimed Milton Friedman/Chicago school economists – that are some of the loudest voices opposed to monetary easing. People like John Taylor, who insist that Milton Friedman would oppose more easing. While Scott Sumner is right that more easing is needed, he is unfortunately a minority among those that claim to support Friedman’s monetary views. The Taylor view has been winning.
While liberals should be more vocal in support of monetary easing, the irony is they are constantly criticized by conservatives for supporting monetary easing (hyperinflation!!!). But the biggest problem is not the understated liberals, it is the conservatives who are currently overwhelmingly wrong on monetary policy.
25. September 2011 at 10:06
Dan, what are you, twelve?
The twentieth century was a laboratory experiment on your argument and your side lost everywhere (with varying degrees of intensity) it was tried. Why do you think Thatcher and Reagan were elected.
However, you ought to apply to the Obama Administration to be a spokesman. David Plouffe doesn’t do it as well as you.
25. September 2011 at 14:36
Your concerns are duly noted, Patrick. It won’t surprise you to know that I consider the neoliberal era dominated by such figures as Thatcher, Reagan, Clinton and now Obama to be a massive social and economic disaster.
26. September 2011 at 05:09
Dan, If you were right, then the Fed could buy up the entire stock of world wealth, making America fabulously rich, with no inflationary consequences. How likely does that seems?
Monetary policy works through the hot potato effect. If rates are zero it works through the expected hot potato effect. If rates are expected to be zero forever then bonds are money and the government can finance spending at zero cost.
There is no example in all of world history of a fiat money central bank trying to inflate and failing. When it happens, I’ll believe it. And Bernanke himself insists they can inflate if they want to. How much more evidence do you need? I’m not the one insisting the Fed can do much more, Bernanke is. And what’s the worst case if I’m wrong–since the Fed insists it can, why not try?
I agree we should get private employers out of the health care business, and turn it over to individuals (HSAs) and the government (catastrophic.)
Russ, You said;
“While Scott Sumner is right that more easing is needed, he is unfortunately a minority among those that claim to support Friedman’s monetary views. The Taylor view has been winning.”
That’s not clear to me. Can I have a list of monetarists who favor tighter money. Is it longer than the market monetarist list? I get emails from lots of monetarists who don’t blog but support me.
26. September 2011 at 05:14
Dan, I might add that a few posts back I linked to various posts that explain my views on things like liquidity traps and the transmission mechanism. They are too long to reprint here. It’s also placed in the right margin of this blog.