Market monetarism: The only way out

Today is a pivotal day, with market monetarism gaining enormous momentum.  So much news is pouring in that I have a big backlog of posts, many already written but I don’t want to post too much in one day. Frank McCormick sent me the following WSJ article:

TOKYO””A growing number of lawmakers are pushing for greater control over the Bank of Japan, just 14 years after the central bank first won its independence, as a strong yen and runaway deficits darken Japan’s economic prospects.

The moves come as politicians across the spectrum, and many economists, complain that the BOJ isn’t acting aggressively enough to combat the country’s persistent deflation, while mammoth borrowing limits the scope of fiscal policy to boost growth. Critics say it could lead to a sharp increase in central-bank purchases of government bonds, possibly triggering a European-style rout on Japan’s sovereign debt.

That’s right; any serious attempt to reflate by buying lots of Japanese government debt will cause their price to fall, just as market monetarists predict.

A group of LDP lawmakers headed by former Prime Minister Shinzo Abe, wants to use the BOJ law revision as a condition for cooperating with the ruling party to pass legislation to raise the sales tax. The tax increase is a paramount goal for Mr. Noda this year, and its passage requires cooperation from the LDP. The BOJ law could also become part of Mr. Noda’s bargaining to win support within his own party, where opposition to doubling the tax rate from 5%, in stages, is strong. More than one-third of the DPJ’s 393 parliament members are members of the “Anti-Deflation League,” a group that has repeatedly pushed the BOJ to be more aggressive in pushing up prices.

The increasingly strong calls to revise the BOJ law comes as central bankers world-wide feel pressure from governments struggling to balance the need to stimulate their economies with aims to curb spending.

You might wonder what’s so market monetarist about an “anti-deflation league.”  Don’t Keynesians also oppose deflation?  Yes, but when people call for a higher inflation target they are always referring to monetary policy, 100% of the time.  That’s right, even though Keynesians claim to believe fiscal stimulus can boost AD, and hence inflation, in their gut they really don’t believe it can be used to target inflation, and hence never even recommend it.  Here’s why this is market monetarist.  In 2009 there were three groups, conservatives that opposed stimulus, Keynesians that favored fiscal stimulus, and MMs who said monetary stimulus is the only solution.  Now the world is waking up to the fact that monetary stimulus is the only solution.  Why?  Just look at what 15 years of Keynesian stimulus has bought Japan:

Tokyo already is spending twice the amount of its tax revenue, and covering the shortfall by issuing bonds. The BOJ is expected to purchase roughly ¥45.6 trillion ($572.2 billion) in government bonds by the end of this year, exceeding slightly the ¥44 trillion in planned issuance.

That’s right; taxes only cover 1/2 of spending, and still no inflation in Japan!  The legislators in Tokyo are finally realizing that monetary stimulus is the only way out.  Indeed the fact that this is being combined with a sale tax increase to make it more politically palatable is 100% pure market monetarism.  Steve sent me the following Mike Moffatt editorial from Canada’s Globe and Mail:

If the United States is going to avoid having a Japanese-style lost decade, the Federal Reserve needs to act in far more dramatic fashion than it has previously during Ben Bernanke’s tenure. .   .   .

The Federal Reserve needs to announce an explicit goal such as expected nominal GDP growth or Cleveland Fed inflation expectations and commit to continually adjusting the money supply to maintain that level. If Mr. Bernanke is unable or unwilling do so, he needs to resign.

And Europe is another area where monetary stimulus is literally the only way out.  Saturos sent me the following:

The European Central Bank has room to cut interest rates, International Monetary Fund Managing Director Christine Lagarde said in a newspaper interview, while denying the fund had opened aid talks with Spain.

“Growth can be spurred by monetary policy, such as the LTRO we have already seen the ECB use. It is also evident that there is room for another interest rate cut,” she was quoted as saying by Swedish daily Svenska Dagbladet on Tuesday.

Wadolowski sent me the following Ryan Avent explanation of what needs to be done:

The Fed’s job is to stabilise demand and to do so by coordinating expectations around a benchmark level of demand growth. The recipe it needs to follow is strikingly simple: set a benchmark for demand growth and promise to use its existing tools until the economy is on track to hit it.

In my view there is only one possible solution that makes sense for the eurozone.  Germany gives in on monetary policy by allowing a 5% NGDP growth target, level targeting, for the next 10 years.  In return Germany gets it wish that there will be no fiscal union.  Why do I think that’s the least bad option?  Because monetary stimulus is both more effective than fiscal aid (by far), and is also far less costly to Germany.  Even in a worst case Germany would have to put up with only slightly higher eurozone inflation that normal, but still below 5% on average.  In contrast fiscal union leads to massive amounts of German tax money disappearing into a bottomless pit of corruption.  They bailed out East Germany already, that’s enough.

The 5% NGDP growth target is also an insurance policy for France.  It assures that if Greece and a few other PIIGS drop out, then euro won’t become so strong that it crushes the French economy.  Obviously any deal must be acceptable to France.

The forces of history seem inexorably moving toward market monetarism.  Hence I expect to be very busy going forward.  I was already planning on suspending comment answers in the fall semester, as I have a heavier than normal teaching load.  I might have to do so even earlier.  The good news is that I am pretty sure I won’t have to teach at all in 2013, so lots of times to answer comments.  Right now I don’t have time to do a heavy load of blogging, and comments, and all the other materials I need to write.  Let me know what you think in the comment section.  I would naturally continue to read the comments, and answer key questions in occasional new posts.  Or I could cut back to a couple posts a week, and keep answering all comments.

But let’s savor this moment.  I don’t know about you, but I feel good.

More to come . . .


Tags:

 
 
 

44 Responses to “Market monetarism: The only way out”

  1. Gravatar of Nick Rowe Nick Rowe
    5. June 2012 at 06:46

    Forget about responding to comments, if the opportunity cost is fewer posts.

  2. Gravatar of Saturos Saturos
    5. June 2012 at 07:03

    On second thought, Scott doesn’t need Twitter. He’s got us 😀

  3. Gravatar of Saturos Saturos
    5. June 2012 at 07:06

    “Right now I don’t have time to do a heavy load of blogging, and comments, and all the other materials I need to write.”

    If those materials are what I think they are, then please, don’t respond to this comment, or any others, and get to work!

    But why aren’t you teaching next year? Is it long-service leave?

    Okay, maybe just one more reply…

  4. Gravatar of Dan Kervick Dan Kervick
    5. June 2012 at 07:08

    Why? Just look at what 15 years of Keynesian stimulus has bought Japan:

    “Tokyo already is spending twice the amount of its tax revenue, and covering the shortfall by issuing bonds.”

    They should stop issuing so many bonds. There is no reason at all why a sovereign government has to balance its spending with tax revenues and borrowings. The Diet should spend new money into existence, and direct the central bank to clear all the payments. This is a kind of monetary policy since it creates money; but it is also a kind of fiscal policy, since it is legislatively authorized spending by the public treasury. Of course Bernanke recognized this way back in 1999 when he pointed out that a helicopter drop was not pure monetary policy, but something that could only be carried out in conjunction with the fiscal authorities. For some reason monetarists refuse to work with this point, and want the central bank to do everything by itself. But it can’t.

    Get out of the monetarist rut of financial asset sales and purchases, and get into the business of pouring money into real public investment and employment.

    Fiscal expansion will only be offset my central bank counter-reaction if the government allows it to be offset. But the legislature writes all the rules.

  5. Gravatar of Saturos Saturos
    5. June 2012 at 07:13

    I knew what that last link was going to be even before I clicked it. Scott’s finally getting the hang of this internet thing.

    Incidentally, does everyone know about the new Beach Boys album? Alexis Petridis actually gave it a good review, in his own sneering way.

  6. Gravatar of Saturos Saturos
    5. June 2012 at 07:16

    Dan Kervick, increasing the money supply and increasing public investment are two seperate taks. There’s no reason why the central bank should have to finance spending directly in order to keep the economy on track.

    Maybe I could take over from Scott in answering dumb objections while he’s gone?

  7. Gravatar of Scott N Scott N
    5. June 2012 at 07:17

    Read the comments, but only respond to those that have some merit.

    I think you are right that things are moving toward market monetarism. Unfortunately, I think things will need to get much worse before these ideas permeate big econ enough to meaningfully change central bank policy.

  8. Gravatar of Saturos Saturos
    5. June 2012 at 07:17

    Nah, probably not strong enough in the Force just yet. But someday, in the fullness of time… ?

  9. Gravatar of Saturos Saturos
    5. June 2012 at 07:19

    Separate tasks. I meant separate tasks. Okay, I’m definitely not ready.

  10. Gravatar of ChacoKevy ChacoKevy
    5. June 2012 at 07:19

    While I’d lean to vote for more posting/less responding, my vote is really which ever one keeps you personally more sane. NGDPLT needs a strong campaign manager this election cycle, so do what you need to do for you.
    Seems like a nice time to thank you for everything you’ve done for us to date, so… thanks!
    Now that that bit of lovefest is out of the way… go get ’em!

  11. Gravatar of o. nate o. nate
    5. June 2012 at 07:34

    I do think the time and attention you pay to commenters is unusually generous and sets you apart among top-tier econ-bloggers, but I’d understand if you have to cut back.

    In other news, this is an interesting post providing more evidence that we are in an aggregate demand shortfall:

    http://soberlook.com/2012/06/equities-vs-inflation-expectations.html

  12. Gravatar of Saturos Saturos
    5. June 2012 at 07:40

    Yes, Scott has created a great community here, mainly because he takes the time to respond to all of us. (He says he’s following the example of Milton Friedman – a surefire way to be a great guy.) That’s why I post here more often than any of the other blogs I read. The only other examples I can think of are Steven Landsburg and Noah Smith. But we’ll all totally understand if Scott needs to take time off to do more important things, even things that aren’t MM related.

    Scott, I still think you should read this post: http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/06/abolish-the-equity-premium-now.html

  13. Gravatar of Morgan Warstler Morgan Warstler
    5. June 2012 at 07:45

    Bury the lede why dontcha?

    WHY don’t you have to teach 2013?

  14. Gravatar of dwb dwb
    5. June 2012 at 07:48

    i wish they were not going to crash the economy before learning the lesson though (my parents always warned me about learning “the hard way”). I see no sign that the Fed is adopting an ngdp target anytime soon unfortunately. I would expect too some chatter in the WSJ, Morgan Stanley or Goldman presentation, but nada.

    I don’t understand the “Indeed the fact that this is being combined with a sale tax increase to make it more politically palatable is 100% pure market monetarism. ”

    I would think in the current situation, the best approach is a sales tax cut and higher inflation target? Or maybe a payroll tax cut not a sales tax cut?

  15. Gravatar of Dan Kervick Dan Kervick
    5. June 2012 at 07:52

    Dan Kervick, increasing the money supply and increasing public investment are two seperate taks. There’s no reason why the central bank should have to finance spending directly in order to keep the economy on track.

    Yes, they are separate tasks Saturos, but experience has demonstrated that the real-world institutional framework in which the central bank operates, and the resulting actual transmission mechanisms that are available to real-world central banks, give those banks very little unilateral control over the broad money supply. The bank can determine the quantity of the monetary base that exists as reserve balances in commercial bank reserve accounts with the Fed. But there is no effective causal mechanism for transforming these reserve balances into lending or spending, as we have now seen for quite some time.

    You might have had an economics textbook that told you the central bank controls the money supply. Such textbooks apparently still exist. But such statements are a stark lie, which has been refuted by a large amount of empirical evidence, institutional analysis and historical experience.

    Scott is full of all sorts of theories about how the central bank can, all by itself, “keep the economy on track”. Some of these theories do not depend on claims about the money supply, but on claims about inflation expectations or aggregate demand. But the theories consist of tall stories based on fanciful theories about the combined effects of asset purchases and expectations-managing rhetoric.

    There are very direct and obvious ways of injecting money into the economy in ways which would directly boost spending on both consumption and investment, in a massive way if desired. Ben Bernanke actually described these “money-financed transfers” in a very famous 1999 paper on the problems in Japan. He described these operations – the famous helicopter drops of monetarist lore – as a kind of unconventional “monetary policy”, but he made it clear in the paper that what he was talking about was actually a policy that required coordination between the spending authorities and the central bank. But Scott doesn’t want to consider these approaches because he is an authoritarian who hates the idea of activist democratic polities actually taking charge of their economic destiny, and wants to leave the direction of the economy in the hands of unelected bankers – and maybe a few economics professors.

    So to me, market monetarism looks like a bunch of guys who are busy taking the wheels off of a car and stripping its parts, but who then complain about why the gas station owner doesn’t pump the car full of more gas to make it go.

  16. Gravatar of Joe2 Joe2
    5. June 2012 at 07:54

    Scott.

    Please don’t give up blogging right now. You gotta keep pushing here as it seems to be getting traction.

  17. Gravatar of Saturos Saturos
    5. June 2012 at 08:12

    experience has demonstrated that the real-world institutional framework in which the central bank operates, and the resulting actual transmission mechanisms that are available to real-world central banks, give those banks very little unilateral control over the broad money supply. The bank can determine the quantity of the monetary base that exists as reserve balances in commercial bank reserve accounts with the Fed. But there is no effective causal mechanism for transforming these reserve balances into lending or spending, as we have now seen for quite some time.”

    You seem to be referring to the immense quantity of reserves currently being hoarded by the banks. Might that have something to do with the fact that we are paying them more than the Fed Funds rate to sit on those reserves? What do you think would happen if we charged them a reserve penalty? Or promised to make the injections permanent? They haven’t burnt their vault cash, clearly they are planning to spend it someday. Do you think that if we forced out all the base money into currency holdings the public would be willing to hold it all at the present level of nominal income?

    My Jedi training continues…

  18. Gravatar of ssumner ssumner
    5. June 2012 at 08:21

    Thanks Nick.

    Saturos, Sabbatical, if it’s approved.

    Dan, You said;

    “Get out of the monetarist rut of financial asset sales and purchases,”

    That’s the old monetarist rut, the MMs got out of that long ago. I want a much smaller monetary base in Japan, 5% of GDP instead of 22%.

    Scott N, I agree.

    Thanks ChacoKevy.

    O. nate, David Glasner’s done a lot on that.

    Saturos, I did read that one, and it’s a good one (as are all Nick’s posts.)

    Morgan, Hopefully a sabbatical

    dwb, Japan will go bankrupt if it keeps increasing its debt. It needs higher taxes and much faster NGDP growth from monetary policy. Even if it does everything right, Japan can look forward to many tough years ahead.

    Thanks Joe2.

  19. Gravatar of dwb dwb
    5. June 2012 at 08:27

    Japan will go bankrupt if it keeps increasing its debt. It needs higher taxes and much faster NGDP growth from monetary policy. Even if it does everything right, Japan can look forward to many tough years ahead.

    i guess my point is that inflation is like a tax. why raise taxes at all? why not just a higher ngdp target and let the “market” find the appropriate “tax” level (i.e. inflation)?

  20. Gravatar of Saturos Saturos
    5. June 2012 at 08:42

    For that to work debt has to grow more slowly than NGDP. Which means taxes must go up, and spending down.

  21. Gravatar of Saturos Saturos
    5. June 2012 at 08:54

    This is incredible: http://www.reuters.com/article/2012/06/01/us-education-vouchers-idUSL1E8H10AG20120601

    Of course the politicking has already begun.

  22. Gravatar of Neal Neal
    5. June 2012 at 08:54

    You should be writing books and articles that will pull the mainstream macro opinion toward market monetarism, not answering every comment. (The cost of writing a personal letter is much higher than the cost of writing an anonymous comment on the internet, so you’re not doing Milton Friedman’s memory a disservice by only answering the occasional merit-worthy comments.)

  23. Gravatar of tim tim
    5. June 2012 at 09:05

    Hi Scott
    Today the Reserve bank of Australia cut rates by 25 basis points. Some economists were predicting 50 bps. The ASX rose slightly but the AUD appreciated. What do you make of this?

  24. Gravatar of Mikko Mikko
    5. June 2012 at 09:24

    I am hoping that you get to a) finish your manuscript on the Great depression and then b) get a chance to write a book on the causes and follies of Great Recession. Whatever it is, it must be good.

  25. Gravatar of Dan Kervick Dan Kervick
    5. June 2012 at 09:35

    Saturos, banks can’t lend their reserves. If banks in the aggregate create more loans, they will create more deposits in the process. That means the total volume of bank reserves must increase, not decrease, no matter what IOR rate the Fed imposes. If the Fed turns reserve balances into nominally depreciating assets, then individual banks will try to exchange those assets with other banks for something that at least loses value less rapidly. But the banking system as a whole cannot offload its reserve balances this way. The total volume of reserve balances can only decrease if the Fed drains it.

  26. Gravatar of Saturos Saturos
    5. June 2012 at 10:01

    They can use the reserves to purchase assets.

  27. Gravatar of Alex Godofsky Alex Godofsky
    5. June 2012 at 10:03

    Saturos, banks can’t lend their reserves. If banks in the aggregate create more loans, they will create more deposits in the process.

    Until such time as the borrowers attempt to spend the money loaned to them…

  28. Gravatar of Saturos Saturos
    5. June 2012 at 10:17

    No, he’s right, when banks creat loans the total deposits in the system increase. But penalty rates can still lead to a decrease in the ratio of reserves to deposits.

  29. Gravatar of RebelEconomist RebelEconomist
    5. June 2012 at 11:13

    “Let me know what you think in the comment section.”

    As you know, Scott, I think anyway you should reduce the number of posts and continue to engage in the discussion, especially with the more selective and concise commenters. As it is, you are writing too many posts with trivial or initial ideas, and then not keeping the discussion going long enough to resolve much. The result is that you are in danger of running an NGDP targeting mutual appreciation society.

  30. Gravatar of Dan Kervick Dan Kervick
    5. June 2012 at 12:53

    Until such time as the borrowers attempt to spend the money loaned to them…

    When those depositors write checks on their accounts, or make payments with their ATM cards, that only means that their own deposit accounts get debited and some other deposit account gets credited. If the parties to the transaction have different banks, then a corresponding transfer will be made from the reserve account of one of the banks to the reserve account of the other bank. The total volume of reserves does not decrease unless the Fed conducts monetary operations that drain them. The reserves never “leave” reserve accounts to become direct assets of the depositors.

    But those depositors do, in a growing economy, acquire more assets in the aggregate in the form of deposit balances created by bank loans. As those aggregate deposits grow, reserve balances must typically grow along with them. If the banks are already holding excess reserves, the aggregate reserve balances might not grow so much, and as Saturos says, the ration of reserves to deposits might decrease. But its not as though in that situation the reserve operations are causing the additional lending. Instead the lending is causing the reserve operations.

    Bank lending is driven by the demand for loans at the interest rates banks are willing to charge, and by the price the Fed sets for acquiring any additional reserves that will be needed to make the expanded volume of payments that will go along with expanded deposits, and to meet any operative reserve requirements. With the price of reserves already as low as it can go, the Fed is not much of a factor at this point in driving additional lending.

    If you want more lending, you need to give banks more of a reason to lend. And to do that, they need more loan applicants with ideas that look profitable. And for that to happen, businesses have to see business opportunities that look profitable to them and require financing. And for that to happen they need more customers with more money to spend. The best way to make that happen, if you want to draw on the government’s inherent monetary authority to do that, is to spend money directly into the economy. The government itself could become a big customer for a whole bunch of new goods and services, and that would immediately employ a massive amount of unemployed resources. It could also hire millions of people to perform a variety of important public services that aren’t getting done right now. It could start by giving direct payments to the states to hire back the millions of people they have laid off. Alternatively, the government could in some other way subsidize the incomes of millions of ordinary Americans, and make it clear that it was going to do this on a sustained basis.

    It can get this money by creating it.

    And if you are worried that the Fed will offset the spending boost with countervailing monetary policy to crucify us to 2% inflation, then we could have our legislature order the Fed not to do that. For example, here is one way to make NGDP level targeting the monetary law of the land: Congress could pass a law directing the Fed to follow that policy. The Fed is a creation of Congress and exercises its monetary authority under powers delegated to it by Congress, and its “independence” is only a matter of legislative choice. So Congress can pass whatever laws it wants to move both monetary and fiscal policy in the right direction.

    Of course, monetarists prefer the more enlightened approach of disdaining to directly legislate the changes we want to see, and relying only on the unofficial begging and wheedling of pundits and economics bloggers aimed at getting the Fed to do some kind of halfway virtual helicopter drop without the helicopters.

    Come on guys, be bold. Why are you so afraid of real public action to choose our future? Why are you so obsessed with keeping macroeconomic policy bottled up with the limited powers and central bank?

  31. Gravatar of RebelEconomist RebelEconomist
    5. June 2012 at 13:08

    Just in case you don’t see it Scott, your curt response to my comment on your last-but-three (and only a day old) post exemplifies why I believe you should spend more time on discussion and less on new posts. You appear to be arguing that it is a non sequitur to say that if monetary policy can affect nominal variables in the long run but not real variables, the best monetary policy can do for unemployment is to keep inflation low and stable. If so, I am surprised, because this is a standard line of central banks, such as the ECB which says “Price stability contributes in several ways to achieving high levels of economic activity and employment” on its website here: http://www.ecb.int/ecb/educational/facts/monpol/html/mp_003.en.html

  32. Gravatar of Dustin Dustin
    5. June 2012 at 13:32

    More posts, less comments!

    I rarely pay attention to the comments anymore, but I always read your posts.

  33. Gravatar of dwb dwb
    5. June 2012 at 13:37

    ” For that to work debt has to grow more slowly than NGDP. Which means taxes must go up, and spending down.”

    why not freeze govt spending, the deficit will close over time. seems like tax increases ( esp supply side ones) could be counterproductive?

  34. Gravatar of Benny Lava Benny Lava
    5. June 2012 at 15:58

    Scott,

    I would suggest curating the comments. Not so much deleting them as ignoring ones that have little content. Also I wouldn’t bother with posts that kick back a page. I asked you a question but never bothered to see if you responded becuase the post was kicked to page 2. Hey, we are both busy people.

    I think the best thing for your economic theory is to be able to make some concise predictions based on solid evidence. For example for me ABC economics (Austrian Business Cycle) has been completely discredited by the lack of inflation that so many of their cohort predicted.

    I also think maybe trying to get more of your ideas into textbooks at the intro level would help.

  35. Gravatar of TallDave TallDave
    5. June 2012 at 16:23

    I’m starting to come around to your way of thinking, Scott.

    Pairing monetary stimulus with fiscal surpluses is the right solution. Fiscal stimulus just increases misallocation. Monetary stimulus pushes money into the private economy, which is teeming with those trillions of consumer/investor decisions and far more likely to create real improvements.

    I think you’re off-base on the housing misallocation being small though (the production misallocation may not have been large, but the pricing certainly was!).

  36. Gravatar of Dan Kervick Dan Kervick
    5. June 2012 at 19:22

    Monetary stimulus pushes money into the private economy

    Good Lord.

  37. Gravatar of Edeast Edeast
    5. June 2012 at 21:21

    In a couple of years if it all goes to shit, you still are a pretty good guy.
    I mean enjoy yourself, congrats and all that. Manic meet depressive, etc.

    Also the reason you don’t get credit/cited is cause cool kids don’t want to give away their sources.

  38. Gravatar of TallDave TallDave
    6. June 2012 at 06:46

    Dan,

    I had a similar reaction to the notion of “spending new money into existence.” In the 1990s Japan built a $2B bridge that is used by a few dozen people.

  39. Gravatar of Rien Huizer Rien Huizer
    6. June 2012 at 20:37

    Scott,

    Maybe you should write just one post every week. It is quite a burden to read so many and the urge to comment combined with the inability to do so before another thought-provoking post appears is frustrating. Besides, you have almost completed your mission by showing that a sizable part of macroeonomists’ work aiming at supporting policymaking is based on a flawed doctrine, and indicated an intuitively compelling one that may offer a way out. That is, if one does not believe that economies are self-correcting until their ability to do so is overwhelmed by forces outside the control of the local government (technology, demographics, environment, economic nationalism elsewhere backed by a state immune to reprisals).

    Maybe market monetarism is a way to make modern democracies cope better with output fluctuations, or better, a way to have fewer and more benign ones, with less trauma to the financial system.

    I doubt it will work without elaborate international coordination (and then the benefits of MM for smaller economies with independent currencies a la Sweden may disappear), but even if it works for only a couple of decades and within the OECD, I guess I would have no objection. The opportunities thrown up by the current business cycles can be exploited only by those who are very rich or those who can exploit private connections and/or information with impunity of under the protection of poorly designed laws. The vast majority of people are mere passengers on a rollercoaster, despite their democratic status. They deserve something better.

    So the next task is to develop the MM prototype into proper, bureaucratic policymaking tools.

  40. Gravatar of Saturos Saturos
    6. June 2012 at 22:47

    Scott –

    DO NOT listen to what Rien just said. This blog is your main work. Just cut back on the comments, maybe stop doing multiple posts a day. But one a week? Rien you traitor.

  41. Gravatar of Saturos Saturos
    7. June 2012 at 00:42

    Dan Kervick – perhaps this classic Market Monetarist paper will change your mind: http://people.su.se/~leosven/und/522/Readings/Bernanke.pdf

  42. Gravatar of ssumner ssumner
    7. June 2012 at 11:28

    Everyone, I answered all these comments yesterday, have no idea where my reply is. I give up.

  43. Gravatar of Major_Freedom Major_Freedom
    8. June 2012 at 06:51

    I ate them.

  44. Gravatar of Opposing Views Opposing Views
    29. September 2012 at 01:47

    […] Scott Sumner on why monetary policy is the only approach that will produce a robust recovery: In 2009 there were three groups, conservatives that opposed stimulus, Keynesians that favored fiscal stimulus, and MMs who said monetary stimulus is the only solution. Now the world is waking up to the fact that monetary stimulus is the only solution. Why? Just look at what 15 years of Keynesian stimulus has bought Japan […]

Leave a Reply