Love this tweet

Vaidas Urba directed me to this tweet from Vitor Constâncio, who’s term as the Vice President of the ECB just ended. Also recall Bernanke’s recent advocacy of level targeting.

Screen Shot 2018-06-13 at 11.06.06 AMLove it!

PS.  Here is the link embedded in the tweet:



21 Responses to “Love this tweet”

  1. Gravatar of Jim Bowerman Jim Bowerman
    13. June 2018 at 07:39

    Scott, when are you joining twitter? Everyone’s there and I think you’d love it. We could use your voice on there!

  2. Gravatar of H_WASSHOI (Maekawa Miku-nyan lover) H_WASSHOI (Maekawa Miku-nyan lover)
    13. June 2018 at 08:12

    What was he doing in the duty of Vice President of the ECB?

  3. Gravatar of ssumner ssumner
    13. June 2018 at 08:34

    Jim, Hopefully never. Twitter seems very shallow to me, lots of snarky high school type comments. How can you have a serious discussion in a tweet? All I see is people trying to shame other people for non-PC remarks.

    Wasshoi, Helping to formulate monetary policy.

  4. Gravatar of ssumner ssumner
    13. June 2018 at 08:41

    Jim, Perhaps I should keep an open mind–maybe I’m just directed to the bad stuff.

  5. Gravatar of H_WASSHOI (Maekawa Miku-nyan lover) H_WASSHOI (Maekawa Miku-nyan lover)
    13. June 2018 at 08:49

    I love the tweet.

  6. Gravatar of Christian List Christian List
    13. June 2018 at 09:58

    Outrageous tweet. Where is the parenthesis with your name in it after NGDP targeting????

  7. Gravatar of rayward rayward
    13. June 2018 at 11:53

    Here is Larry Summers all in on NGDP targeting:
    Sumner’s great contribution to economics is that the economy is most in need of stimulus is at the moment it appears the least. We likely are at that moment.

  8. Gravatar of Effem Effem
    13. June 2018 at 13:56

    Funny, the same economists who years ago were pushing a 6% NGDP target are now saying we are getting stimulus when we “don’t need it.” Yet, under their own NGDP-targeting rule, we would still be stimulating full-throttle as we remain well below 6%. I’m guessing “4-5%” has now replaced 6%..but then we are back to having discretion, not a rule.

  9. Gravatar of ssumner ssumner
    13. June 2018 at 14:44

    Raynard, No, that’s your contribution, please don’t link that silly idea to me.

    Effem, Who are these economists who advocated 6% NGDP targeting?

  10. Gravatar of B Cole B Cole
    13. June 2018 at 15:52

    Huzzahs for NGDPLT!

    Remember my friends: aim high and send in the choppers early.

    Do not genuflect to instruments, but genuflect to results.

  11. Gravatar of Saturos Saturos
    13. June 2018 at 18:36

    $ = handclap emoji

    $ Get $ on $ Twitter $ Scott $

  12. Gravatar of ssumner ssumner
    13. June 2018 at 20:13

    Saturos, Can you give me a link to a twitter account where I’ll see the interesting stuff not available on the blogs I read?

  13. Gravatar of Benjamin Cole Benjamin Cole
    14. June 2018 at 01:52

    OT but in the ballpark:

    “Hang Seng slammed for 300-point loss in afternoon trade as the higher cost of money rattles investors”–South China Morning Post today.

    HKMA raised rates to match Fed.

    Also, Bangkok Post reports “massive capital outflows” from Thailand when 10-year US Treasuries top 3% yield.

    David Beckworth has written about how much of the globe’s economy is essentially pegged to Fed rates. Keep an eye open.

  14. Gravatar of Benjamin Cole Benjamin Cole
    14. June 2018 at 02:26

    Add on, Seoul stock market down 1,84%.

    “The Fed’s move to increase the key rates faster than previously expected sparked worries among investors over capital outflows from emerging economies,” said Lee Kyung-min, an expert at Daeshin Securities.

  15. Gravatar of W. Peden W. Peden
    14. June 2018 at 06:27


    I notice that the Fed’s forecast for 2018 is now 2.8% for growth and 2.1% for inflation. Looks like monetary policy is just about right (almost identical to the 1982-2017 average).

    For the first time in well over a decade, American monetary policy is close to the point where “tighten a bit” makes sense to me.

  16. Gravatar of ssumner ssumner
    14. June 2018 at 09:53

    W. Peden, Yes, and the second quarter is likely to be strong. I suspect this is not sustainable past 2018. Let’s see what happens when the unemployment rate stops falling (which it must do, at zero)

    But overall I agree, monetary policy has been reasonable for a few years now.

  17. Gravatar of B Cole B Cole
    14. June 2018 at 16:53

    Larry Summers likes NGDPLT, but at 5% to 6% up per year. I like those numbers.

    My comments, so valuable to public discourse, seem to be disappearing from this blog?

  18. Gravatar of James Alexander James Alexander
    16. June 2018 at 02:12

    You already have a twitter account … a friend set you up ages ago and automatically tweets a link to your blog posts … you just need a bit more access to it … and then only follow sensible people … let the rabble follow you and you can then ignore or join in at your choosing

  19. Gravatar of James Alexander James Alexander
    16. June 2018 at 02:14

    In fact you already have nearly 3000 followers, despite following precisely zero yourself .. a very healthy ratio!

  20. Gravatar of ssumner ssumner
    18. June 2018 at 21:17

    James, Interesting, I never knew that.

  21. Gravatar of Basil Marte Basil Marte
    2. July 2018 at 14:44

    NGDPLT of the automatic kind (from has some fatal problems.

    1) While the possibility of a risk premium is discussed, that of a liquidity premium is not. However, if the NGDP futures prove to be a highly liquid security, a high degree of amplification can prove deadly. If buying $1 of NGDP futures reduces the stock of money by $1000 (replacing it with a less liquid security worth $1000), then it is possible that, liquidity premia generally increasing, at least $1 of additional demand for NGDP futures is created. While this is not a concern currently (we have IOER and a moribund fed funds market), if the flood of liquidity will be drained one day, the “amplification” could become a problem.

    2) Excuse me for beginning with an analogy. Suppose you are in a room whose temperature is controlled by a thermostat, and you want to change the room’s temperature but you can’t control the thermostat’s setting. You know perfectly well that bringing a radiator into the room will do no good, because the thermostat will turn up the AC and counteract the effect. Instead you get an ice pack from the freezer, and put it onto the thermostat. This makes the thermostat measure a lower temperature, and so it turns on the heating, warming the room. Similarly, a puny candle lit under the thermostat would chill the room.

    Now, take the analogy to any prediction market. Suppose I begin a market-deepening operation of my own; I make a credible promise to divide a (fixed) large sum of money between all contracts, in the same manner as Fed-funded market deepening would. This increases the capitalization of the market, but doesn’t affect the prices of any instrument.

    What happens if instead I credibly promise to pay out my pool of money proportionately between long positions? Capitalization still goes higher, but now the symmetry between long and short positions is broken. This payoff I promise increases the expected value of NGDP futures, and their market price follows that expected value; and in the process, changes the stance of monetary policy. If I can build a sufficiently large long position in dollars, its appreciation might be greater than my expense on the parasitic payout. Even if that’s not possible, I can still nudge NGDP downwards, if my goal is simply to shake the US economy.

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