Matt Yglesias on “Recapturing the Romance of Monetary Policy”
Just as I start to sound more like Yglesias on fiscal policy, he starts to sound more like me on monetary policy. When I saw the title of his latest, I thought it was going to be a comment on my previous post.
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15. July 2011 at 13:23
I have to say that I did not really realize that the Republican Party of old – the party of Hoover – still existed. I thought the Republican Party now was the party of Nixon or Eisenhower – but it isn’t – It really is the Party of Hoover – or worse.
And who is that? Its the people who gave us prohibition and the Scopes trial. The really loony right wing fringe.
And I just do not think that what animates people like Rick Santelli or John Taylor or Eric Cantor or Larry Kudlow is any real knowledge or even intellectual conviction. I think it is just pure and simple sadism. They have the currency – and they want to drive prices and incomes down so the currency they have will buy more stuff.
They tell is that it is the common interest of all of us that these particular people over there (those with no currency) should really really suffer so that somehow we will all benefit. But in fact they really do enjoy watching all that suffering happen.
That is especially viable on the face of Kudlow. When he talks about king dollar and the dollar good as gold is really literally quivers with pleasure at the thought of all the suffering those policies will cause.
Barry Eichengreen writes about the fact that the deflationary course – the cross of gold – became a difficult one when the lower classes (the people without gold) got the vote. The Republicans want to try it again.
15. July 2011 at 17:52
JimP, Yes, the idea of going back to gold right now is just nuts.
16. July 2011 at 04:34
One night on his CNBC show, Kudlow advocated the Fed using a “shock and awe” approach to withdrawing monetary stimulus, and he wanted it immediately. He explicitly said he wanted the Fed to shock the markets with a huge interest rate increase.
I laughed, as did his crazy guests, who maybe couldn’t go quite that far with him, but it was also sad because this was a former Fed economist.
16. July 2011 at 04:35
As I recall now in fact, Kudlow said that in general he wanted the Fed to surprise markets as a matter of policy.
16. July 2011 at 08:46
Mike, What good did he see higher interest rates doing?
16. July 2011 at 21:32
Scott,
Obviously I can’t speak for Kudlow, but Tom Hoenig said something similar at an informal breakfast speech the other day.
He said the expectation in the market is for easy money long into the future, thus they have a complacent attitude of, “I can borrow easily anytime I like, so there is no urgency to make investments now.”
Thus, according to Hoenig, if the Fed were to announce an increase in rates, it might shake businesses out of their complacency and actually invest now while the getting is good.
As I’ve mentioned elsewhere, I’m not sure how serious he was because he was just talking off the cuff during q&a when he said that.
16. July 2011 at 21:36
“Yes, the idea of going back to gold right now is just nuts.”
We need to scream this from the rooftops and send out mailers and hire a sky writer.
What’s scary is the gold bugs are getting louder and louder too.
17. July 2011 at 05:58
Hoenig, I’m not sure if he was joking–it’s frightening to contemplate the fact that someone so powerful might have been serious.
17. July 2011 at 05:59
Sorry, That was directed at Onliberty.
17. July 2011 at 19:22
Yes – the whole thing is just amazingly horrible.