The Bernanke press conference

I heard much of the press conference (not all) and I must say that I thought Bernanke was far better than in the past.  I initially underestimated the Fed’s move (in the previous two posts.)  The markets may have initially made the same mistake; they rose further as they had more time to digest the new policy.   Here are a few observations:

1.  Bernanke emphasized that monetary stimulus is not like fiscal stimulus, it actually reduces the budget deficit.  That’s right.

2.  He said it was an 11 to 1 vote.  The Fed is clearly behind him and hence the policy has credibility.

3.  He kept talking jobs jobs jobs.  And he emphasized that the Fed would do pretty much whatever it takes to get some progress on the employment front.  Of course by itself that would be a bad policy.  But when combined with the 2% inflation target (which he said had equal weight) it’s getting pretty close to NGDP targeting.

4.  Speaking of NGDP targeting, Bernanke brought up the idea (without any prompting by reporters) and talked about Woodford’s plan for NGDP level targeting.  He didn’t endorse it (how could he when the Fed only recently adopted a 2% inflation goal) but he certainly wasn’t critical of Woodford.  I had the impression that if he wasn’t constrained by being head of the Fed right now, he’d be pretty sympathetic to Woodford’s proposal.  And why do I have to call it “Woodford’s proposal?”

5.   I’ve gotten a lot of criticism from people, even my friends in the blogosphere, for going too easy on Bernanke.  Talking about how he’s well-intentioned, etc.  I think this press conference shows that my comments were justified.  A commenter named Mark C recently sent me a survey by Bloomberg that showed that the vast majority of economists did not think money was too tight, and only 1 out of 66 thought money was far too tight.  Even though Bernanke is a Republican, he’s to the left of the mainstream of a profession that votes 70% Democratic.  His call for doing whatever it takes to get more jobs was clearly sincere.

I’ve gotten a flood of comments and emails, and won’t have time to respond for several days.

PS.  I notice that Twitter has an Evan Soltas tweet showing that the odds of Obama being re-elected rose on the news.  Justin Wolfers wondered about the long and variable lags.  My hunch is that Obama’s re-election odds are positively correlated with the S&P500.  I.e. a rising stock market makes people more optimistic that things are getting better.  Does anyone know if such a correlation exists?

PPS.  Kudos to commenter Saturos, who seemed to be one of the first to notice the importance of what happened today.


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83 Responses to “The Bernanke press conference”

  1. Gravatar of Cthorm Cthorm
    13. September 2012 at 14:16

    Scott – how did you notice Evan’s tweet? I thought you vowed abstinence?

    Justin’s wondering about long and variable lags was answered instantly of course. 2 Year TIPS breakevens went from 1.33 on 8/29 to 1.66 today. The low was 0.73 in June.

    I’m thrilled at the details of the Fed’s move today, but I still have some reservations. The same reservations as David Beckworth actually.

  2. Gravatar of Conservative Krugmanite Conservative Krugmanite
    13. September 2012 at 14:22

    To address your question about correlations between the stock market and odds of the incumbent winning, I’m pretty sure Nate Silver uses the performance of the S&P 500 in his forecasting model for the election. I’d assume that to be a yes.

  3. Gravatar of Squarely Rooted Squarely Rooted
    13. September 2012 at 14:33

    Scott,

    First of all, congratulations. This is vindication for you and you should hopefully be imbibing your beverage of choice or eating a delicious meal.

    Secondly, there is definitely a rough correlation between stock prices and presidential electoral fortunes.

    http://www.businessinsider.com/stocks-predict-president-88-percent-accuracy-2012-8

    What I think this really means, though, is that this makes the election more important; as the odds of vigorous recovery in 2013 and beyond rises, the more either Romney or Obama will be able to take credit for it, and thus be able to brand their party as the one that saved America from economic disaster.

  4. Gravatar of Josiah Josiah
    13. September 2012 at 14:34

    Bernanke emphasized that monetary stimulus is not like fiscal stimulus, it actually reduces the budget deficit.

    I can see how monetary stimulus wouldn’t necessarily increase the budget deficit. But how would it reduce it?

  5. Gravatar of dtoh dtoh
    13. September 2012 at 14:36

    Scott,
    I hope you noticed that when asked about the transmission mechanism, Bernanke talked primarily about “financial asset prices.”

    and….Congratulations!!!!

  6. Gravatar of Squarely Rooted Squarely Rooted
    13. September 2012 at 14:37

    Josiah,

    In two ways, one direct, one indirect. Directly, it will reduce the nominal interest the government pays on its debt, which will lower deficits going forward. Less directly, it can spur economic growth without incurring new debt (unlike fiscal stimulus) which will both reduce both total deficits due to increased revenues and reduced outlays as well as reduce the debt/GDP ratio.

    -SR

  7. Gravatar of DKS DKS
    13. September 2012 at 14:43

    Scott, yes, a rising S&P500 is a statistically significant predictor of incumbent reelection.

    That’s according to Nate Silver, the statistics maven at the New York Times’ election predictions blog (fivethirtyeight.blogs.nytimes.com).

    Nate Silver says the S&P500 appears to predict reelection because it predicts upcoming macroeconomic conditions. That is, the S&P500 on Election Day doesn’t predict election success on Election Day, once you factor out more direct economic variables like unemployment. But the S&P500 in September somewhat foretells where those more critical economic variables may be in November.

    His post on it is here:
    http://fivethirtyeight.blogs.nytimes.com/2012/08/18/aug-17-does-a-bullish-stock-market-predict-a-faster-recovery/

  8. Gravatar of StatsGuy StatsGuy
    13. September 2012 at 14:50

    … I recognized immediately what it meant, I shifted all of my remaining cash assets into equity indexes immediately. It’s going to take a bit longer for the markets to really digest today’s event. It was bigger than any of them realize.

    Scott, you write:

    “Even though Bernanke is a Republican, he’s to the left of the mainstream of a profession that votes 70% Democratic. ”

    I am unwilling to forgive you for going soft on Bernanke, although it’s quibble compared to what you’ve helped achieve. What happened today SHOULD have happened a year or two ago. The cynical part of me observes that Bernanke, a Republican, just handed Obama the election. Could it have been because of this?

    http://blogs.wsj.com/washwire/2012/08/23/romney-reiterates-he-would-replace-bernanke/

    How convenient…

  9. Gravatar of Full Employment Hawk Full Employment Hawk
    13. September 2012 at 14:54

    Hamlet has finally decided to act. If he had acted sooner, unemployment would be lower now. But better late than never.

    The fact that everybody except Lacker voted for this would indicate that it is too little to restore the economy to full employment.

    Now the BOG should follow this up by reducing the interest on excess reserves to zero.

  10. Gravatar of StatsGuy StatsGuy
    13. September 2012 at 14:56

    (extra link)

    BTW, just to re-iterate my point about Bernanke’s political-minded moves, guess what investment outperformed the most today?

    Short selling Romney’s contract on InTrade…

    http://www.intrade.com/v4/markets/contract/?contractId=743475

    Mitt Romney to be elected President in 2012

    Share on facebook Share on google_plusone More Sharing Services
    35.1%
    CHANCE
    Last prediction was: $3.51 / share
    Today’s Change: -$0.16 (-4.4%)

    Yes, that’s TRIPLE the return on stocks.

    So you can argue that Bernanke is above politics, but the markets seem to agree with me that Bernanke’s move today was heavily political. Bernanke realized that he has two choices: sit tight and get fired, then watch his legacy disintegrate as he gets blamed for the catastrophe that follows, OR side with the lesser of two evils, Obama. Today’s decision was heavily institutionally motivated.

  11. Gravatar of Full Employment Hawk Full Employment Hawk
    13. September 2012 at 14:57

    “I can see how monetary stimulus wouldn’t necessarily increase the budget deficit. But how would it reduce it?”

    The Fed hands most of its profits over to the treasury and this becomes part of its revenue. The more assets the fed has, the greater its profits.

  12. Gravatar of Michael Michael
    13. September 2012 at 15:03

    “I can see how monetary stimulus wouldn’t necessarily increase the budget deficit. But how would it reduce it?”

    1. Monetary stimulus will raise nominal income, which will raise tax receipts, which will reduce the deficit.

    2. Any profits the Fed earns on its assets are returned to Treasury.

    3. It may reduce the likelihood of additional fiscal stimulus.

  13. Gravatar of Full Employment Hawk Full Employment Hawk
    13. September 2012 at 15:03

    “as the odds of vigorous recovery in 2013 and beyond rises, the more either Romney or Obama will be able to take credit for it,”

    The tea party in Congress will force Romney to reverse the Fed’s expansionary monetary policy and switch to a contractionary policy. Romney has shown no backbone in standing up to these people so far, and that is not likely to change.

  14. Gravatar of ChargerCarl ChargerCarl
    13. September 2012 at 15:12

    My guess is that if Romney won the tea party would mysteriously shut up.

    But thats just a guess.

  15. Gravatar of Bill Ellis Bill Ellis
    13. September 2012 at 15:28

    Scott,
    Nate Sliver factors in stock market performance in his models.

    Nate is the man on this stuff.

  16. Gravatar of Bill Ellis Bill Ellis
    13. September 2012 at 15:31

    Oh…See DKS beat me to it… with a nice link too.

  17. Gravatar of Rustem Sharipov Rustem Sharipov
    13. September 2012 at 15:45

    Scott,

    Can the following be a trasmission mechanism Fed hopes to use?

    Home ownership had picked out and falling to its “natural” level and mortgage banks have to be rescued from MBS as a necessary step towards restructuring of US economy.

    MBS purchasing will help facilitate more mortgage bankruptcies and relieve some homeowners from responsibility of paying mortgages and as a result bring more flexibility to the job market.

    Sincerely,

    Your former student

  18. Gravatar of Ray Lopez Ray Lopez
    13. September 2012 at 15:55

    I see. So power has passed from an unelected Federal official, known as Ben Bernanke, to a formerly obscure West Coast economics professor, named Scott Sumner. What will our children say when hyperinflation returns? Well so be it, I’m long gold.

  19. Gravatar of Bababooey Bababooey
    13. September 2012 at 16:11

    …West Coast economics professor, named Scott Sumner…

    Hey now, don’t blame us out here, the good prof is strictly fly-over country/New England. He aspires to a daily breath of sweet Pacific Ocean air and all the mellow, good feeling that inheres.

  20. Gravatar of John Thacker John Thacker
    13. September 2012 at 16:13

    StatsGuy:

    You seem to be saying that Bernanke:
    1) Knew that QE3 would help the economy,
    2) Could have done it earlier, but
    3) Didn’t want to do it just to help Americans until there was the threat of him personally being replaced.

    That seems like a pretty harsh accusation of Bernanke. I prefer to think that he or others on the FOMC were being blind before, so that either he didn’t know or he couldn’t bring along the others.

  21. Gravatar of John Thacker John Thacker
    13. September 2012 at 16:14

    In any case, if StatsGuy is correct, then the American people owe Mitt Romney special thanks for making a brave sacrifice of his own political chances in order to spur Bernanke into finally doing the right thing. A more noble act we may never see in politics.

  22. Gravatar of OhMy OhMy
    13. September 2012 at 16:30

    This is beginning of the end of the monetarist fad, they committed that this “should work” and since it won’t (except fueling a stock and commodity bubble, growth will actually weaken) we will have a proof.

  23. Gravatar of wh10 wh10
    13. September 2012 at 16:48

    Dr. Sumner,

    Over and over though, including today, Bernanke has said that he doesn’t think monetary policy tools can solve today’s employment and price stability problems. Rather that it can just “nudge” the economy in the right direction. That other policy tools, including fiscal policy, are needed. Isn’t this him expressing his opinion that NGDP targeting, a monetary policy tool, wouldn’t be as effective as you believe it would be?

  24. Gravatar of John Thacker John Thacker
    13. September 2012 at 16:48

    OhMy:

    Seems as likely as people giving up on fiscal stimulus after the 2009 stimulus, which President Obama and his advisors at the time said “should work” and was big enough, and they didn’t need a bigger one.

    I believe that opponents after that claimed that it “fuel[ed] a stock and commodity bubble,” but that growth actually weakened. Whereas people who favored the policy before now started claiming that it wasn’t big enough and we needed more.

    I think that this is the right policy, but I’m not so blind as to believe that policy arguments really get settled so easily.

  25. Gravatar of r.d. r.d.
    13. September 2012 at 17:19

    Yes, the correlation exists.

    http://redonkulusblog.blogspot.com/2012/06/could-fed-save-obama.html

  26. Gravatar of libfree libfree
    13. September 2012 at 17:35

    Scott,

    I assume President Obama will be sending you a thank you card soon? Congratulations, your hard work seems to have paid off. Don’t take your foot off the gas now though.

  27. Gravatar of Benjamin Cole Benjamin Cole
    13. September 2012 at 17:38

    The headline I see is that the Fed will buy $40 billion a month, in an open-ended QE program.

    I congratulate the entire Market Monetarism movement for this advance in Fed policy, and of course that includes Scott Sumner.

    We are halfway there to MM as Fed policy.

    Is this a victory for the blogosphere? I think so, although as Sumner (and many others) have noted, good ideas rise simultaneously in many quarters, so even in hard science you often have multiple people who think they are first.

    Nevertheless, it was the blogosphere that kept MM alive, pushed it, even named it, allowed for a mass to develop, etc etc etc.

    I have movie rights to the Scott Sumner story, even if unilaterally seized.

  28. Gravatar of Evan Soltas Evan Soltas
    13. September 2012 at 17:45

    Scott,

    Interesting that you noticed my tweet, considering that you don’t use Twitter. (Honestly, the rest of the econoblogosphere is there already, and it is possible to use with moderation. Most of us do.)

    Here is the link to the hourly graph on Intrade. http://bit.ly/QJWIwt

    Beyond any reasonable doubt, I would say, Intrade clearly thinks the latest Fed actions will help the President politically. But it’s not that much: a 1.4 percentage point gain in his odds of reelection.

    I don’t think that is inconsistent with a “long and variable lags” view of monetary policy which works through multiple channels. (Of course, it isn’t inconsistent with instantaneous changes in expectations, either, which is likely your view.) If he was being reelected in November 2013 — i.e. next year — I would imagine the gains would be substantial, perhaps on the order of 10 percent, assuming that it was a surprise, such that it was not priced in ahead of time. (The non-surprise factor of the Fed action today is also important to remember, implying that 1.4 percent gain was only what the shift from probable to certain was worth for the President and thus understates the political value of monetary easing.) But all these demand unknowable or unlikely counterfactuals.

  29. Gravatar of Cameron Cameron
    13. September 2012 at 17:48

    Tyler Cowen declares today Scott Sumner day: http://marginalrevolution.com/marginalrevolution/2012/09/its-not-just-monetary-policy-its-scott-sumner-day.html

    :)

  30. Gravatar of libfree libfree
    13. September 2012 at 17:54

    The market for Obama has been increasing for the last 15 days or so. The market may have already priced in action by the Fed but not quite as much as the Fed committed to today.

  31. Gravatar of Major_Freedom Major_Freedom
    13. September 2012 at 18:02

    To all the people who are claiming this is good news for Obama:

    Monetary policy “works” via a time lag. It’s not instant!

    One could make the case that Bernanke et al are timing things so that the economy remains in the crapper during the November elections, but then once QE eventually gooses the market, when Romney may be President, Bernanke can give a boost to the GOP because they will of course take credit and the voters will believe it.

  32. Gravatar of Major_Freedom Major_Freedom
    13. September 2012 at 18:05

    Benjamin Cole:

    Only in crazy MM world can additional money printing, which will distort the economy my even more, and prolong recovery even more, is greeted with “congratulations.”

    I still feel like I’m walking the halls of an insane asylum.

  33. Gravatar of kvm kvm
    13. September 2012 at 18:08

    Scott – do you consider this policy enough to be a sample of NGDP targeting?

    If so, what measurements need to be hit by what date for you to consider say you were right? What would it take for you to say you were wrong?

  34. Gravatar of marcus nunes marcus nunes
    13. September 2012 at 18:09

    Among the MM´s that have made comments, I´m the most skeptical!
    http://thefaintofheart.wordpress.com/2012/09/13/euphoria%C2%B4s-in-the-air/

  35. Gravatar of StatsGuy StatsGuy
    13. September 2012 at 18:22

    @John

    Funny. :)

    I’m not actually saying he did not want to do it until there was a threat of him being personally replaced. I’m saying he did not pull the trigger until the institutional/political threat to the Fed from NOT acting was worse than the threat from acting.

    In that sense, yes, we owe Romney a great debt for falling on his sword by pandering to his extremist elements. Had Romney just avoided the issue or held to the center, and Bernanke has not felt that a Romney victory was an imminent threat to the institutional independence of the Fed, then I am more skeptical.

    Also, to all those economists who think that Bernanke is not motivated by the institutional incentives of his organization, then you are ignoring your own Chicago-born public choice theory. (Niskanen and Tullock were both Chicago trained.)

    Just sayin’… If you think Bernanke was just doin the right thing, then you’re arguing that all humans are economically motivated creatures, except for economists, who are above such frail motivations.

  36. Gravatar of Saturos Saturos
    13. September 2012 at 18:52

    “Kudos to commenter Saturos…”

    Staying up all night last night (Australian time) to watch the story unfold, nearly sleeping in and missing my crucial 9AM appointment this morning: totally worth it. Thank you, nose-for-history-in-the-making. You led me to this blog, and haven’t let me down since.

    (Also I totally predicted Scott revising upward his estimate of the significance of the event; already seen pattern where MM greats respond to unambiguous leaps in the direction of their policy preferences with knee-jerk snark. {Also known as overcorrection for optimistic bias/covering-your-forecasting-ass})

  37. Gravatar of Morgan Warstler Morgan Warstler
    13. September 2012 at 18:58

    Nate Silver on Sept 4th, 2010 put the odds of 60 seat GOP gain at 1:4.

    Nuff said.

    If Romney is going to win this he’s going to have to target the press and the Fed directly. Brass knuckles. Price of gas. Price of milk. Say out loud Ben if afraid of being fired.

    NOTE: remember my game strategy question? Assume Ben gets ONE BITE at the apple and he has to try and put Obama in, and maintain credibility, what does he do, when does he do it?

    Today you saw the answer. 2nd note: most of you, but not all were not willing to go on record and hypothesize. Those of you are lesser mortals.

    I’m still happy with my and Scott’s bet. As far as I can tell, its the only serious question facing conservatives: either we play offense and bankrupt and ruin the Dem promise of free shit for votes, or we play defense and follow Sumner to keep the economy from hitting crisis, and let the corporations / SMB guys go global, and force govts. to compete.

    I just can’t let go of the frame I’ve seen time and again since my youth, so I’m sticking with it.

  38. Gravatar of Saturos Saturos
    13. September 2012 at 19:10

    Scott, I’d be ordering a couple Mercedes-Benz about now. Actually get your daughter one while you’re at it. Optimize your portfolio for some serious speaking-engagement revenues, coming soon. (And you totally deserve it sir. Even if you don’t believe in desert ;) )

  39. Gravatar of Jonathan Jonathan
    13. September 2012 at 19:12

    In Eisenberg & Ketcham (BEJEAP, 2004, “Who Blames Whom for What…”) we found that the Dow had no (conditional) influence on voting in US presidential elections. Income and unemployment matter a lot, but only at the national level, and only from the election year, not from the first 3 years of the presidency. HTH.

  40. Gravatar of Morgan Warstler Morgan Warstler
    13. September 2012 at 19:28

    Prediction: The Chinese Govt. will be hiring Scott.

  41. Gravatar of Saturos Saturos
    13. September 2012 at 19:35

    Scott (and everyone else): You can watch a replay of the Bernanke conference here: http://federalreserve.gov/mediacenter/vlink.htm?bcpid=738917326001&bckey=AQ~~,AAAAD2CGfQE~,o7E-F2eteXOq24Nb1BSfw9-MMjWzkave&bcpid=720309829001&bckey=AQ~~,AAAAD2CGfQE~,o7E-F2eteXMoEVLLY98AnOfR2ME8A5iN&bctid=1838905844001

    And here’s the transcript: http://www.federalreserve.gov/monetarypolicy/files/FOMCpresconf20120913.pdf

  42. Gravatar of creditwherecreditisdue creditwherecreditisdue
    13. September 2012 at 20:16

    “And why do I have to call it “Woodford’s proposal?””

    Why do you?

    Has anyone asked why Woodford doesn’t mention you in the whole Jackson Hole paper?

    Maybe it doesn’t matter. Does everyone know that its a summary of Sumner? Or am I being unfair to Woodford?

  43. Gravatar of Benjamin Cole Benjamin Cole
    13. September 2012 at 20:28

    Major Freedom:

    I enjoy your commentary, and you are obviously a smart guy.

    But I think if I tossed $1 million in cash on your doorstep, I suspect there would be a increase in economic activity in your neighborhood thereafter. Yet there is enough slack, that the inflationary impact would be nil.

    Think of old Western towns where economic activity was often constrained until counterfeit money was introduced. Then, a circulating fake dollar might make the rounds dozens of times, everyone building fences, rounding up cattle, buying drinks and bullets etc. There is actually a book written about this.

    (Would it be better to take part of the work force, have them burrow in the hills like moles to no one’s economic benefit, come back to town with one ounce of gold, and then start working?)

    If people agree to work for a slip of paper, then that paper has value (and it will have value if it can be used to pay taxes, or people believe it can be used).

    Ponder this: Let’s say drug lords of the world re-patriot the $800 billion in US cash held offshore, all in the course of one month. They start buying and fixing up houses, laying big money down on whores (who spent it at restaurants and clothing stores etc) and buying fancy cars with big modified grills. What a boom we would have here! Without any more money printing.

    Well, the drug lords aren’t going to re-patriot the money. Oddly enough, I have never heard a tight-money guy say that the drug money coming home in one bunch is a bad idea, or morally wrong etc.

    But printing up more money is. Go figure.

  44. Gravatar of ChargerCarl ChargerCarl
    13. September 2012 at 20:46

    So after reading Krugman’s take on it I’m a lot less excited than I was before. Clearly its a step in the right direction, but I’m not sure if its nearly enough.

  45. Gravatar of Dave Thomas Dave Thomas
    13. September 2012 at 21:14

    When in the economic history of the United States has monetary policy alone facilitated the creation of self-sustaining jobs and real economic growth free of the threat of inflation?

    We have a Senate majority leader and a president intent on raising marginal tax rates significantly. We also have Obamacare’s taxation on investment income set to start.

    The monetary policy announced by Chairman Bernanke today seems utterly impotent in the face of these oppositional fiscal policies.

    This policy mix of monetary expansion coupled with tax increases failed utterly in the Great Depression and the Stagflation decade.

    What am I missing from the historical record that would justify optimism?

  46. Gravatar of Rob Rawlings Rob Rawlings
    13. September 2012 at 21:14

    “But when combined with the 2% inflation target (which he said had equal weight) it’s getting pretty close to NGDP targeting.”

    Won’t they hit the 2% inflation target pretty quickly and be back to business as normal , with NGDP more or less on the same (sub 5%) trajectory as now ?

  47. Gravatar of Saturos Saturos
    13. September 2012 at 21:21

    Neglected point: how much does it matter that we still have IOR? Also, check out Evan Soltas’ new Twitter picture. Apparently he did get that exemption from Econ 101. Yichuan didn’t though.

  48. Gravatar of Jonathan Jonathan
    13. September 2012 at 21:25

    PS Nate Silver’s MPL was much higher when he was writing about baseball.

  49. Gravatar of Saturos Saturos
    13. September 2012 at 21:43

    Andy Harless – When the Fed pays for QE w interest-bearing reserves, it seems to me this is more “borrow money & buy stuff” than “print money & buy stuff”

    (Twitter)

  50. Gravatar of Saturos Saturos
    13. September 2012 at 21:50

    Stephen Williamson weighs in: http://newmonetarism.blogspot.com.au/2012/09/the-fed-plays-with-its-tools.html

  51. Gravatar of Major_Freedom Major_Freedom
    13. September 2012 at 22:09

    Benjamin Cole:

    But I think if I tossed $1 million in cash on your doorstep, I suspect there would be a increase in economic activity in your neighborhood thereafter. Yet there is enough slack, that the inflationary impact would be nil.

    See it’s comments like these that are the reason why I am convinced that you and other inflationists who think like you have no conception of the concept of economic calculation, and coordination.

    I didn’t say that dropping newly created dollars on somebody’s doorstep doesn’t stimulate “activity.” See, I am not concerned with mere “activity.” I am concerned with the right activity, or “rational” activity, or “sustainable” activity, or whatever you want to call the economic activity that is subject to certain constraints that justify the activity’s expansion relative to the rest of the economic system, such that the whole economic system is sustainable in the real sense.

    it all boils down to humans not being omniscient. Not all “activity” is healthy. There is such a thing as “activity” that denigrates the economy, that destroys capital, that results in a future necessary (and painful) correction.

    When you focus on crude aggregates like “aggregate output” and “aggregate employment” and “aggregate spending”, and so on, you easily gloss over the more important micro-level activity which the economy actually consists of.

    Think of old Western towns where economic activity was often constrained until counterfeit money was introduced.

    A healthy market not only contains economic activity, but it also contains many unseen abstentions from “bad” economic activity. Again, not all activity is healthy. not all activity should take place. Not all activity is wealth generating and welfare improving.

    You see unemployment and idle resources, and rather than figuring out WHY these exist, you instead look solely to reducing these symptoms with deceitful and misdirecting monetary manipulation from central banks. Even if the central bank prints a zillion dollars, and “spending” doesn’t rise the way you subjectively want, you believe the solution is more inflation. You aren’t connecting the cash hoarding to economic coordination, because you view cash holding as innocuous at best, and positively destructive at worst. You refuse to consider individuals setting their own prices and interest rates and solving their problems “difficultly.” You don’t understand that the reason resources are idle, is because their owners want a higher price. Inflation merely tricks them into selling at a lower real price, and in the process, encourage activity that is NOT in line with the rest of the economy in the real sense.

    When you say things like:

    Then, a circulating fake dollar might make the rounds dozens of times, everyone building fences, rounding up cattle, buying drinks and bullets etc. There is actually a book written about this.

    You are committing a classic example of ignoring the unseen and the consequences of activity on those parties related to the activity in question once, twice, three, … times removed. You only consider the activity in the narrow sense, and you ignore what otherwise would have taken place, and you ignore the effects on other parties.

    Sure, fences can be built, drinks can be bought, and so on, but this “activity” would almost certainly be wealth destroying on net. You just aren’t grasping this because you are, like I said, ignoring the secondary and tertiary effects, as well as ignoring the counter-factual.

    If those fences were not built, and those drinks were not bought, then other, more highly valued and urgently needed goods and services would have been produced and sold. Yes, the fences and drinks are valued by the people directly involved, but because their incomes derived from the printing press, nobody else in the economy was able to communicate their valuations of the actions of the consumers in question. Why couldn’t they earn the money to build the fences and buy the drinks? Why did these activities require a printing press? The reason is because those who earn money and have cash, did not value the activity of producing more fences and more drinks. As such, the gains to the consumers in question, came at a loss to those whose money balances and incomes are denominated in that currency.

    Note that is makes no lick of difference that a certain arbitrary “price level” doesn’t rise much in the temporal sense. The correct way to understand any “modest” rise in general prices due to this inflationary activity would be to understand that prices may have in fact FALLEN, in which case those who earn and hold balances in that currency, would have been able to buy more than they otherwise ended up buying It’s like the difference between having $100 and buying goods that cost 0.5% more, and having $100 and buying goods that cost 5% less, or whatever. Sure, prices may not rise much in the temporal sense, but they are higher relative to what they otherwise would have been in the counter-factual sense. It is here, the unseen, that the economist has to consider. Not just looking at observable prices over time.

    What if production doubles and prices and costs would have fallen by half? If someone inflates so much that prices remain flat, then that would represent a huge loss to those who have to pay twice the prices than they otherwise would have paid. It would be a gross error in judgment to claim that because the price level didn’t rise, then everybody is no worse off.

    (Would it be better to take part of the work force, have them burrow in the hills like moles to no one’s economic benefit, come back to town with one ounce of gold, and then start working?)

    Would you rather have tens of thousands of individuals wasting time speculating in the FX markets, which occurs in a fiat regime, rather than them producing real goods and services for others because there is no need for FX speculation in a free market money standard, since it is almost certain that gold and silver would be the money of choice?

    Would you rather have booms and busts that result in tens of millions of people unemployed producing nothing, but consuming at other’s expense?

    Would you rather have the state have access to a printing press, thus being able to finance wars and other mayhem that the taxpayers and bond investors would rather not finance?

    Would you rather have hundreds if not thousands of economists around the world wasting their time trying to figure out the holy grail of money printing, rather than teaching engineering or physics that results in technological advanced that increase the production of real goods and services for the consumer?

    Would you rather have Sumner wasting his time trying to convince the money printers to print money according to his rule, rather than having him teach computer science that makes American students and entrepreneurs more competitive in the global market?

    Would you rather have economic coordination or discoordination?

    Would you rather people have freedom in the choice of what money they use, or do you like this gun in people’s faces system that threatens them with a cage and rape if they dare trade in something other than dollars, and don’t pay taxes in dollars?

    Would you rather wealthy people continue to receive the newly created fiat money first, before poor people, thus continuing the wealth transfer from poor to rich in a completely arbitrary fashion totally apart from relative productivity differences?

    This worrying over people devoting their labor producing gold, as if fiat money requires no labor whatsoever, as if fiat money has no costs, is such an intellectually bankrupt complaint that it is clear to me that you guys have completely lost the argument. All you have now are the most powerful guns. That’s the only reason you are even hear yammering about the alleged costless wealth producing fiat money inflation and shedding crocodile tears at the fact that a free market in money would also incur costs.

    If people agree to work for a slip of paper, then that paper has value (and it will have value if it can be used to pay taxes, or people believe it can be used).

    Nobody agreed to this. Guns were used to not only confiscate people’s gold money (in 1933), but guns are also used to force people to pay taxes in fiat dollars, which is the only thing that creates a demand for them in commerce.

    For you to sit there and give me this contingent hypothetical “if” statement, as if it is even close to reality, shows that all you inflationists have are hypothetical defenses of hypothetical worlds. You seem to recognize that in the real world, people don’t voluntarily choose to accept toilet paper over alternative commodities when it comes to storing value purposes. They require “convincing” from SWAT teams.

    Ponder this: Let’s say drug lords of the world re-patriot the $800 billion in US cash held offshore, all in the course of one month. They start buying and fixing up houses, laying big money down on whores (who spent it at restaurants and clothing stores etc) and buying fancy cars with big modified grills. What a boom we would have here! Without any more money printing.

    And then what? A bust that will be painful. Haven’t you learned anything from history?

    Money is attracted to capital accumulation. Money doesn’t generate capital accumulation. You have it backwards. Money should be viewed as an outcome of economic action, not a source of it. Viewing it as a source makes it likely to gloss over the counter-factual analysis that is crucial to understanding whether or not the “activity” that is generated is wealth producing or wealth consuming. No, you can’t say that because a fence was built, that wealth was produced. By that logic, if I robbed everyone 100%, and then financed the construction of a giant school for blind kids, then because “activity” took place, I supposedly created wealth, instead of consuming massive quantities of it.

    Again, and I cannot repeat this enough, not all economic activity is wealth creating. The market process is the best system we have that can minimize wealth consuming activity. Inflation exacerbates wealth consuming activity, because it violates the market process.

    Where the hell dis you people learn economics anyway? Somebody got ripped off.

  52. Gravatar of Full Employment Hawk Full Employment Hawk
    13. September 2012 at 22:09

    “I still feel like I’m walking the halls of an insane asylum.”

    You are, but you are one of the insane persons in the asylum.

  53. Gravatar of Major_Freedom Major_Freedom
    13. September 2012 at 22:15

    You are, but you are one of the insane persons in the asylum.

    Well at least you admit this blog is an asylum.

  54. Gravatar of Major_Freedom Major_Freedom
    13. September 2012 at 22:20

    Sorry for being caustic, but from my perspective, you guys are in part intellectually responsible for the depression, whether you accept it or not.

  55. Gravatar of Saturos Saturos
    13. September 2012 at 22:50

    MF, why is it that economic calculation continues to function effectively in the face of natural disasters, etc (assuming the economy does not become less free) but cannot cope with money printing? Do you think maybe the observed fluctuations in interest rates upon Fed announcements are optimal responses to anticipated money supplies, with no miscalculation involved? Similarly for anticipated rates of price inflation? So that you are reduced to argueing that some quantity of money is the “right” quantity of money for an economy, with spontaneous order being impaired upon a shift to any other quantity? Even though money is just a tradeable measuring-stick?

  56. Gravatar of RebelEconomist RebelEconomist
    13. September 2012 at 23:32

    Sorry to rain on your parade, but this does not seem to have to much to do with NGDP targeting to me. It looks more like just another retreat from the teacher’s pet types who have come to dominate central banking, who dare not do anything courageous or independent for fear of…..disapproval! No doubt every other easist cult, including Krugman’s disciples, MMTers etc, will be claiming victory too. I am happy for you to celebrate though; as long as you accept responsibility when the authorities start fining people for not spending their money, because that is the logical conclusion to this process. Unless I can escape to Germany, I imagine myself as the last recalcitrant saver in the Anglo Saxon world, being hunted down to a cave somewhere in the woods.

  57. Gravatar of Doc Merlin Doc Merlin
    13. September 2012 at 23:38

    “Bernanke emphasized that monetary stimulus is not like fiscal stimulus, it actually reduces the budget deficit. That’s right.”

    In the short run its true. In the long run, the opposite seems to be true.

  58. Gravatar of mbk mbk
    14. September 2012 at 00:17

    Statsguy:

    Frankly you’re making it look like Bernanke and only he has total power over Fed decisions. And like all it took was for Bernanke to change his mind, egotistically motivated, and suddenly all save one members would side with him on an issue that has been controversial. It seems much more likely that the various factions within the Fed made a pact some time ago, that Bernanke would get his wish (or a variant thereof) if and only if a more “conservative” policy was tried for x months and failed to reach y [insert KPI of your choice] within a certain time frame. That scenario neatly explains long wavering and sudden near unanimous resolve. In fact who knows, it sounds more like Obama himself could have been part of that pact.

    As for the political motivations presumed, if politics was so easy. Determine who’s going to be president, keep job. Sounds way too deterministic. Too many moving parts. I believe institutional mechanics explains a lot more than conspiracy theories.

  59. Gravatar of FT Alphaville » The day after: lingering thoughts and questions about QE3 FT Alphaville » The day after: lingering thoughts and questions about QE3
    14. September 2012 at 00:25

    [...] of Michael Woodford and, perhaps, NGDP level targeting. (And Tyler is right: don’t forget Scott Sumner in all [...]

  60. Gravatar of Re-Economising, Re-Philosophising Re-Economising, Re-Philosophising
    14. September 2012 at 01:10

    [...] Now that Ben the Money Bomber has issued QEIII, there will be engagement with the NGDP debate, Scott Sumner and the Austrian/Australians. And a lot more reference to the highly influential American [...]

  61. Gravatar of BobbyD BobbyD
    14. September 2012 at 01:11

    I think that Obama’s re-election odds may have increased because, given recent situation in the middle east, people don’t seem to trust the right’s handling of conflict there. Perhaps I’m just speaking for myself, but foreign policy still matters and the first six years of G.W. Bush don’t inspire confidence another modern Republican foreign policy…

  62. Gravatar of Edward Edward
    14. September 2012 at 01:12

    MF,

    ” I am concerned with the right activity, or “rational” activity, or “sustainable” activity, or whatever you want to call the economic activity that is subject to certain constraints that justify the activity’s expansion relative to the rest of the economic system, such that the whole economic system is sustainable in the real sense.”

    How do you know and presume to lecture market particpants that the choices they make are not “sustainable in the real sense?!!?” Its just another mindless assertion of the Austrians that doesnt have any real proof to back it up. The inflationary boom might have financed investment and consumption that would have taken place down the road, only with prior saving to back it up. Why is this shortcut a bad thing? In fact, you might even say that the printing press is a productivity enhancing technology because it allows us to do more in less time. Isnt that what labor saving devices are all about?! Who CARES if the boom is not backed by prior real saving. Real saving is not a fixed lump, it can come afterwards it can fluctuate downward (or upward!) with increases of income and production.

    “Inflation merely tricks them into selling at a lower real price, and in the process, encourage activity that is NOT in line with the rest of the economy in the real sense.”

    Another feeble and simpleminded assertion.

    “You are committing a classic example of ignoring the unseen and the consequences of activity on those parties related to the activity in question once, twice, three, … times removed. You only consider the activity in the narrow sense, and you ignore what otherwise would have taken place, and you ignore the effects on other parties.

    All of us understand the broken window fallacy and understand Bastiat. What you don’t understand is that counterfactuals are only useful up to a point. When they become wildly detached from reality (I hope u see where I’m going with this) they cease being useful.

    “Sure, fences can be built, drinks can be bought, and so on, but this “activity” would almost certainly be wealth destroying on net.”

    Okay, Either you’re 1. High on some drugs, 2. A complete moron or 3. Just utterly bats**it crazy.

    You’re paralleling the mistake that Hayek made when he answered the question in the ’30s, by a student about buying a coat, whether it would increase economic activity. He said that it wouldn’t for complex reasons.
    Occam’s razor people. Haeyks answer was nonsense then it its nonsense now.
    (Some of you keep wondering why we bother with this boorish knave? Its because we can’t let bulls***,t which I’m allergic to by the way, stand. Right, everyone?)

    “The reason is because those who earn money and have cash, did not value the activity of producing more fences and more drinks. As such, the gains to the consumers in question, came at a loss to those whose money balances and incomes are denominated in that currency.”

    How do you know they didn’t value it? How do you know they werent just delaying and delaying and delaying hoping for a lower price? Youre presuming, AGAIN that cash holders have the unconditional privelege and right to a free return on their cash at the expense of the rest of the economy going to hell. They don’t. (Neither do government bond holders but that’s a separate point?) How many times must we educate you before this penetrates your thick skull?
    Oh and buy the way, the Fed is aiding buyers when it creates stable expected inflation because the only way to tell when there’s a floor on prices is to notice that prices are rising or more importantly, are EXPECTED to rise Ever notice the phenomenon of a “temporary sale?” You even get the mechanism by which deflation works wrong. The effects of demand deflation dont work DURING the deflation, they work AFTER when prices hit a floor and are expected to RISE thus generating future expected inflation (or NGDP growth)

    “What if production doubles and prices and costs would have fallen by half? If someone inflates so much that prices remain flat, then that would represent a huge loss to those who have to pay twice the prices than they otherwise would have paid. It would be a gross error in judgment to claim that because the price level didn’t rise, then everybody is no worse off.”

    NGDP level targeting takes care of that genius. Haven’t you learned ANYTHING yet? The fed is not supposed to respond to a signal a that prices fall durinng a productivity deflationary blast. Theyre only supposed to repsond in declines of nominal spending. And even if price levels were targeted, what is the essential differance between an increase of nominal wages by 11% with the price level at zero, and a zero increase in wages and a fall of the price level by 10%?

  63. Gravatar of Edward Edward
    14. September 2012 at 01:14

    Well Scott, now that Bernanke is FINALLY moving albeit with the speed of a mentally deformed turtle crossed with a geriatric snail, what next?

  64. Gravatar of Y.Alekseyev Y.Alekseyev
    14. September 2012 at 02:10

    Something that hasn’t been mentioned so far:

    1. I liked very much the fact that the fed has upgraded it’s growth forecast of the economy. Maybe the ugrade was not sufficient, but still – the Fed’s forecast is more than just a forecast.

    2. I did not at all like that their forecast of inflation sees the numbers below 2 percent in the medium term. They should be telling us that their asset purchases will spur inflation to 2% or slighly higher at least at some point in the next 3-4 years AND THAT THEY ARE COOL WITH IT. I do not anticipate major inflation spikes until the output gap is way down, but as gets we get incrementally closer to full capacity, it would be surprising to see inflation remain below 2%.

    3. Having said the above – have a look at the fed projections of GDP growth and inflation for 2013 and 2014 with the new forecasts: 2013 – inflation at 1.6-2.0% and RGDP at 2.5-3.0%; 2014 – inflation at 1.6-2.0% and RGDP at 3.0%-3.8%. I will leave it to the more mathematically inclined to figure out where that gets us as far as NGDP goes for those two years. Naturally, this gets us close to the right (per SSumner) RATES of change, but does not get us to the right LEVELS – for that we need to see some catch up growth. The Fed does not currently think it’s policy action will produce the latter. That’s probably the biggest disappointment of an otherwise very encouraging policy shift.

  65. Gravatar of RebelEconomist RebelEconomist
    14. September 2012 at 02:27

    Edward, your reasoning “Why is this shortcut a bad thing? In fact, you might even say that the printing press is a productivity enhancing technology….” reminds me of the Phillips curve idea that a bit of inflation was OK, because it fooled workers into accepting lower real wages and thereby boosted employment.

    The trouble is that people learn to anticipate the trick, such as, in the present context, by bidding up commodity prices, and it stops working. Then the authorities’ response tends to be to accelerate the stimulus, which again people learn to anticipate. And then the authorities increase the rate of acceleration, and so on. If the stimulus has any bad side effects, you end up suffering from these, with the stimulus still not working. Worse, when you eventually realise this, you have accept really bad times to unwind the expectations.

    To me, it looks as if monetary policy has been repeating this process over the last twenty odd years – policy interest rates were reduced ever to ever lower minima in response to every crisis from LTCM to the dot com bust, to 9/11 etc, until they have ended up at practically zero, followed by QE, followed by declarations of commitment to more QE and everlasting zero short rates, and probably next to taxation of money holdings.

    I fear for the future.

  66. Gravatar of RebelEconomist RebelEconomist
    14. September 2012 at 02:40

    And while I was writing that comment, Y.Alekseyev hints (“the Fed’s forecast is more than just a forecast”) at another potential depravity to which the Fed could sink – don’t just stimulate, lie to people about how much effect you expect the stimulus to have.

  67. Gravatar of Y.Alekseyev Y.Alekseyev
    14. September 2012 at 04:04

    @RebelEconomist: no, do not lie. Do enough through actions and words so that the forecast makes sense as a story of recovery. Otherwise it’s like the Fed saying: “we think we can help the ailing economy and here’s what we’re doing today; but, as per our forecast, today’s actions are not sufficient to produce a full recovery.”

    Market monetarists think that the Fed can produce 5% NGDP growth just (or primarily) by saying that this is what it wants to achieve. Personally, I am skeptical about the efficacy of this path. Moreover, I have even deeper concerns about the distributional impacts of growth spurred by monetary policy alone. But at the same time, one must recognize that putting the Fed’s credibility on the line in very explicit terms by setting concrete numerical targets for NGDP, or “growth and inflation” (same thing) or “inflation and unemployment” (same thing if you believe in the Phillips curve) is the utmost the Fed can do. And I’d like to see at least one plausible theory of how to produce a recovery put to the test. Because it’s much better than nothing. And because we’re damn certain not getting an Keynesian stimulus any time soon.

  68. Gravatar of StatsGuy StatsGuy
    14. September 2012 at 08:02

    @MBK

    “I believe institutional mechanics explains a lot more than conspiracy theories.”

    I’m not proposing a conspiracy theory. It can’t be a conspiracy if it’s on the front page of the washington post. It’s pure institutional public choice theory. Open for everyone to see.

    Romney threatens Fed for cheap points. Fed retaliates.

    Gives an entirely new meaning to the phrase “Don’t fight the Fed.”

    Romney contract down _another_ 2.8% today on Intrade.

  69. Gravatar of Floccina Floccina
    14. September 2012 at 09:14

    Congrats to all of us NGDPLTers. If we do not see a significant drop in unemployment I will drop my support of NGDPLT.

  70. Gravatar of Links: Free Money Makes Me Want to Conquer Senkoku « Lemons of Noble Note Links: Free Money Makes Me Want to Conquer Senkoku « Lemons of Noble Note
    14. September 2012 at 10:24

    [...] So we got QE3, and a nod to nominal GDP targeting. That’s a good thing. It’s not a perfect fix, but the willingness to employ ongoing QE [...]

  71. Gravatar of The Power Of Blogging | The Penn Ave Post The Power Of Blogging | The Penn Ave Post
    14. September 2012 at 10:52

    [...] Power Of Blogging Posted at 3:00 on September 14, 2012 by Andrew Sullivan Scott Sumner puts yesterday’s round of Fed activity in perspective: Bernanke emphasized that monetary stimulus [...]

  72. Gravatar of Jamboree Jamboree
    14. September 2012 at 11:02

    MF – I hope that you do not become disillusioned, and tire of providing a lonely counter point to the often cheerleading responses. I value Scotts posts but the fanboy responses sometimes approach Apple levels and are in danger of becoming groupthink.

    Now that Uncle Ben will print until employment hits a number he is happy with, and presumably, will print more if it does not, or goes negative again. I am wondering where to submit my business plan. I have a software business. This keeps me in fine fettle, but it has been a lot of work. He can buy this off me first, then, I had an idea to create a range of fashionable left foot shoes. I think that this has a lot of potential. I need only $10million to buy the first run of 1 million left foot shoes. A bit of marketing spend would be handy. Also, giving potential customers some free money would also help. We’d have a hit before you know it.

    I had another idea to create automated tutoring software for algebra. It should improve performance by five sigma in the kids. But, honestly, looks like too much hard work. Fashionable left foot only shoes is the winner. Ben, the plan will be in your inbox in the morning.

  73. Gravatar of David F David F
    14. September 2012 at 11:16

    Enjoy reading your posts Scott. Curious to get your thoughts on the following risks of the Fed’s policies (or if you could direct me to your posts that address the following topics on my mind):

    1. NGDP Targeting – while I understand how it’s better than inflation targetng (ie. need to tighten when say an oil shock happens), is there a risk in NGDP that only Consumption is stimulated and not Investment and thus we get unproductive GDP growth ala the 2000′s when homebuilding was the biggest driver of economic growth?

    2. Inflation – I realize given the debt in the system that the Fed would love some inflation. But how can we be certain that the Fed can control inflation on the back-end a few years out? I guess they could sell assets but at that point, hasn’t the multiplier effect (once banks start lending aggressively again) unable to be stunted and thus recent Fed actions necessarily will cause some form of higher than target inflation?

    Apologies if you’ve addressed this in prior posts. Just came upon your blog today and would love to think more about these topics.

  74. Gravatar of Mike Sax Mike Sax
    14. September 2012 at 11:40

    “Monetary policy “works” via a time lag. It’s not instant!”

    Market Monetarists claim the opposite-that it works with “long and variable leads”

    Friemdan used to believe in lags.

    Anyway Obama’s numbers were looking pretty good prior to Bernanke.

  75. Gravatar of Mike Sax Mike Sax
    14. September 2012 at 12:29

    Yeah I loved how he talked “jobs, jobs, jobs.” He’s the only one of our public servatns doing that now. I’d elect him to something if he ran-my favorite Republican bar none.

    I read a piece recently that showed that when the stock market rises during an election year that’s a very strong signal the President will be re-elected.

    Another good sign for the incumbent-he wasn’t primaried. Back in 2011 all you could hear on teh liberal blogs was about how Obama should be primaried, However, it didn’t happen and bleieve it or not only one incumbent President since 1900 has lost if he wasn’t primaried-you guessed it: Hoover.

  76. Gravatar of Mike Sax Mike Sax
    14. September 2012 at 12:32

    So Eagan-Jones is not a fan of QE3 huh? They actually cut our rating claiming that it will lead to lower GDP and higher interest rates.

    Once again proving their relevance

  77. Gravatar of Cassandra Cassandra
    14. September 2012 at 13:46

    Scott:
    Here is a recent article reporting on a U.S. senior economist at Capital Economics who argues that an S&P500 above 1200 means the likely re-election of the President because of the underlying causal factor related to both, the incrementally improving health of the economy.
    http://www.cnbc.com/id/48923615

  78. Gravatar of Dave Thomas Dave Thomas
    14. September 2012 at 15:58

    Stock prices reflect underlying economic conditions? Rising stock prices indicate improving economic health?

    From a historical study of the stock market over time neither one of these assumptions is supported by the evidence.

  79. Gravatar of ssumner ssumner
    14. September 2012 at 16:17

    Rustem, That may be part of it, but it’s not enough to make a big difference.

    Evan, Someone sent me the tweet. I don’t even know how to use twitter. My hunch is that the financial market rally does impact the election. I saw a blog post correlating the Obama Intrade contract with the TIPS spread.

    KVM, Yes it’s close, but it’s not level targeting, which is what we really need, and it’s not targeting the forecast. If we had a futures market I’d guess NGDP expectations rose around 0.3% to 0.5%. NGDP targeting would do far more. The results are in, there’s nothing more to be learned.

    Saturos, You said;

    “Scott, I’d be ordering a couple Mercedes-Benz about now. Actually get your daughter one while you’re at it. Optimize your portfolio for some serious speaking-engagement revenues, coming soon. (And you totally deserve it sir. Even if you don’t believe in desert”

    I believe in incentives. Lonely obscure bloggers need to be rewarded when successful—otherwise who’ll want to take the risk? :)

  80. Gravatar of Saturos Saturos
    15. September 2012 at 07:23

    Well this makes Bernanke look really good: http://www.brookings.edu/research/opinions/2012/09/13-fed-binder

    And yes, Tyler Cowen should have prizes ready for this kind of situation, shouldn’t he?

  81. Gravatar of Opinion: New World Economics Opinion: New World Economics
    16. September 2012 at 00:25

    [...] the words of Professor Scott Sumner, “He kept talking jobs, jobs, [...]

  82. Gravatar of Full Employment Hawk Full Employment Hawk
    16. September 2012 at 12:11

    “Sorry for being caustic”

    Members of ideological cults tend to get upset when people outside the cult do not accept their ideology and panaceas.

    Consider seriously the possibility that you may be wrong, that the market monetarists may be right, and that your ideological blinders keep you from seeing it.

  83. Gravatar of Hafiz Hafiz
    4. April 2013 at 00:47

    I think it’s Scott Sumner Day in Japan today.

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