Nobody told me

Matt Yglesias has the following post:

Cato Institute Staging Gold Standard Love-In

Given the past five years of unusually low inflation and unusually low employment relative to the size of the population, the only sensible question to ask about monetary policy is whether the Federal Reserve has done enough to support aggregate demand and economic growth. Instead, the libertarian Cato Institute is sending out invitations to a November conference dedicated to talking about the gold standard:

I am presenting a paper at this conference and as you might expect I’ll advocate NGDP targeting.  I don’t plan any discussion of gold.  The Cato Institute has published one of my papers on the crisis, and I’ll do a comment over at “Cato Unbound” next month.  Many other classical liberal think tanks have asked me to contribute.  Still no invitations from progressive think tanks.  But then as Matt once said:

The Great Recession has revealed lack of capacity for engaging with monetary issues to be a major institutional weakness of the progressive movement.

On many issues the Dems are the party of bad ideas and the GOP is the party of no ideas.  On monetary policy it’s the reverse.



24 Responses to “Nobody told me”

  1. Gravatar of John Thacker John Thacker
    23. October 2013 at 06:12

    Seems like a more accurate description would be “the Cato Institute is holding a conference for critics of the Federal Reserve.” The conference appears to include critics that have what I would say are even worse ideas than what the Fed is doing now, but also people who have better ideas.

  2. Gravatar of Callum McPherson Callum McPherson
    23. October 2013 at 07:28

    As someone who identifies as a progressive I completely agree that leftists are generally dismissive and uninterested in monetary policy. I think this is because it is seen as helping out the banks and wealthy investors but doing nothing for the little guy. There are also some more understandable worries about distributional effects of QE.

  3. Gravatar of Saturos Saturos
    23. October 2013 at 07:33

    Of course, you will be emphasizing the forward-looking, level-targeting and rules-based aspect of your policy, over and above the NGDP aspect, I hope.

  4. Gravatar of Saturos Saturos
    23. October 2013 at 07:36

    And where NGDP is brought up, it’s probably best to emphasize that targeting NGDP means that if the Fed does follow its own mandate then it has only one rule to follow and there is never any “tradeoff”.

  5. Gravatar of @YoungEcon @YoungEcon
    23. October 2013 at 07:39

    Wait a sec, that last line sounds somewhat familiar! But I think you are right on it being reversed for monetary policy.

  6. Gravatar of @YoungEcon @YoungEcon
    23. October 2013 at 07:50


    I went back and saw you responded to my comment in one of the prior post. Thanks for the reply.

    By the way, what do you think of this paper? I don’t think I have seen it discussed by you:

    On the Optimality of a Dominant Unit of Account∗

  7. Gravatar of Tom Brown Tom Brown
    23. October 2013 at 08:42

    “Still no invitations from progressive think tanks.”

    I actually do think that’s a shame. It’s possible to be an MM advocate w/o being a libertarian, if I read you correctly, right Scott? So what’s the problem?

    I imagine that if Obama were to embrace MM ideas that it would ruin it for the right-of-centers and you’d lose all your invitations from them. Ha! … well nothing to worry about I guess.

  8. Gravatar of TravisV TravisV
    23. October 2013 at 08:47

    Prof. Sumner,

    Any estimate for when you’ll release your paper on Milton Friedman and how he’d think about NGDP targeting?

  9. Gravatar of ssumner ssumner
    23. October 2013 at 11:08

    Callum, That may be true but it’s incredibly sad. There’s no such thing as “not using monetary policy,” there is only good and bad policy. I’d hope that progressives would want to work hard to get good policy adopted.

    Saturos, So I shouldn’t mention that Bill Niskanen, former head of the Cato Institute, favored NGDP targeting? Or that Hayek favored NGDP targeting?

    How about Bennett McCallum?

    Youngecon, I only steal from the best! Seriously, I now understand why so much plagiarism occurs. I had forgotten you wrote that, but now I remember. It goes into my subconscious, and I convince myself it was my idea.

    That paper looks interesting, but do they include labor markets, unemployment, etc?

    Travis, It’s a long way away. It will come out in an Oxford U. Press book on Friedman, perhaps a year from now, or more. I did a post a few months back, if you are interested.

  10. Gravatar of James in london James in london
    23. October 2013 at 12:56

    Somewhat off-topic, but am wondering what Market Monetarism is expecting to happen in countries with low NGDP growth. Just more of the same and/or risking something bad happening if another negative demand shock occurs. I do feel a bit like an old-fashioned inflation-worrier, thinking hyperinflation is around the corner, but in reverse. Now I fear I am worrying too much about deflation around the corner. But I guess you need a trigger of a negative shock to actually see the really bad side of persistently low NGDP growth – as opposed to “merely” persistently high unemployment, especially youth unemployment.

  11. Gravatar of Michael Michael
    23. October 2013 at 14:10

    If you can sell Charles Plosser on the merits of NGDPLT, you win!

  12. Gravatar of TravisV TravisV
    23. October 2013 at 14:46


    “My Five-Point Plan for Fixing Everything”

  13. Gravatar of Geoff Geoff
    23. October 2013 at 17:25

    Commies like Yglesias have to give themselves a daily affirmation of the evils of gold, because he knows that without inflation, his socialist dreams can only be financed by taxes or borrowing, which is clearly unholy because of the restrictions involved.

  14. Gravatar of Lorenzo from Oz Lorenzo from Oz
    23. October 2013 at 21:43

    Commies like Yglesias how to take oneself out of any intelligent conversation in three words.

  15. Gravatar of Yglesias Psychoanalyzes Gold Bugs: Back at Ya, Matty Yglesias Psychoanalyzes Gold Bugs: Back at Ya, Matty
    24. October 2013 at 05:48

    […] Yglesias pokes fun at a Cato conference on the Fed (HT2 Scott Sumner). Here’s […]

  16. Gravatar of ssumner ssumner
    24. October 2013 at 07:25

    James, More of the same.

  17. Gravatar of Tom Brown Tom Brown
    24. October 2013 at 08:46

    Scott, Lars Christensen has an article up complaining about the silliness of the “tin foil hat” internet Austrians. I asked him about this video, which is becoming super popular on youtube:

    Still no response from Lars, but George Selgin watched the whole thing and confirmed it was tin-foil-hatter material, but with a little truth mixed in. Your thoughts?

  18. Gravatar of Tom Brown Tom Brown
    24. October 2013 at 08:47

    … it shouldn’t take more than a minute or two to confirm George’s prognosis I think.

  19. Gravatar of Floccina Floccina
    24. October 2013 at 11:35

    On many issues the Dems are the party of bad ideas and the GOP is the party of no ideas. On monetary policy it’s the reverse.

    Very quotable.

  20. Gravatar of Geoff Geoff
    24. October 2013 at 17:31



  21. Gravatar of Lorenzo from Oz Lorenzo from Oz
    24. October 2013 at 21:29

    Youngecon: I am finding the Optimality of a Dominant Unit of Account paper hard to follow, since the authors sometimes seem to be talking of unit of account and sometimes medium of account.

  22. Gravatar of Lorenzo from Oz Lorenzo from Oz
    24. October 2013 at 21:33

    Geoff. Take the set of beliefs/doctrines which are definitive of being a communist. Take the set of beliefs of Matt Yglesias as stated or implied in his writings. The overlap between set “Communist” and set “Yglesias” would be vanishingly small. If your political taxonomy is so impoverished you fail to notice this, then it is not one any sensible person wishes to engage with.

  23. Gravatar of Geoff Geoff
    25. October 2013 at 02:30


    Show me one argument of Yglesias calling for less government regulations of the economy.

    The “overlap” is much greater than you can parse, and this is due to your inability to distinguish between the ideology motivating one’s specific proposals, with the set of proposals themselves. Despite your bankrupt worldview that seeks explicit statements as the only legitimate data, the fact that he hasn’t written about every conceivable political issue isn’t sufficient to conclude the overlap is “small.”

    Read Yglesias’ posts assuming it’s coming from Plekhanov. There are few instances where it is clear who is writing.

  24. Gravatar of ssumner ssumner
    25. October 2013 at 05:36

    Tom, I’ll take their word for it.

    Thanks Floccina.

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