Thursday, November 24, 2011

Happy Thanksgiving to all My Readers!

    I really appreciate and love you all! Honestly you're what it's all about to me. I hope you all eat a lot of turkey or if your a vegan have some real good turkey substitute-I'm not but I have eaten some real good ones.

    I have in the last few days met some new playmates over at the Angry Bear. Mike Kimel of course

    If you haven't please check him out over here-there are some other very good writers there like Rebecca Wilder

    I also have met JzB who gave me the impetus to my last post

    He writes a very nice blog which I encourage you to check out if you haven't

   He indicates he doesn't have a very high opinion of Scott Sumner. He may be write I have seen warning signals myself. I have tried to give him the benefit of the doubt till now because his idea of NGDP sounds at least plausible. If JzB can see a hole in that I certainly would like to hear it. It just seems like the NGDP targeting could be a welcome change over the fixation the Fed has had with inflation since Volcker.

   To be sure I am aware that some of the sources of Sumner's idea are wild-eyed libertarian types who envisage this taken us down the road to a time of "gentle deflation and hard money" which is exactly what I am opposed to. Some of these guys are even Free Banking enthusiasts. Still it sounds to me that in the short term it should enable the Fed to focus more on full employment and less on inflation.

    For a little on the background of Sumner and the NGDP idea please see this

    What was partiuclarly exciting to me is that Nick Rowe of Worthy Candian Blog answered my post

     This was very exciting to me as what I knew about Nick Rowe is Krugman has mentioned him in print! So I-in my own mind-was only once removed from Krugman mentioning me.

     This post about Rowe answering me turned out to be my most read post ever here at Diary of a Republican Hater-I broke my previous record for visitors to a post, in fact it was double my previous record! The reason for this was that Delong himself has placed me on his twitterstorm. Of course this gave me a new post. What impressed Delong was that I managed to counter poise the words "Nick Rowe" and "Snooky" in the same sentence. For me Nick Rowe leaving a comment was sort of like Snooky saying hello to me-Snooky saying hello to me would be like a lunar eclipse only more unusual.

     Of course, I was hoping that Delong might put this on twitterstorm as well but, no such luck! Oh well. I do now and again send links to stuff I wrote to Delong on Twitter, don't know if he ever reads it.

      Oh well, it's all about milestones. My next one will hopefully be even better than that. The main thing my friends is that we keep the faith. While I am interested in politics as you may notice I have a particular passion for economics because so much of what you see in politics only makes sense when you understand the economics.

     I am a fan though of Money Illusion too. I don't agree wtih Sumner on fiscal mattters I still think he is on to something with NGDP.

     Right now I am reading Dean Baker's new book-he has a PDF version right here online. By making it free(the hard covered version has a cost of course) he is putting his money where is mouth is and we should thank him. For me what's particularly important is his emphasis on how important monetary policy is without most of us knowing anything about it. You can argue-as Baker does-that what Volcker did in the early 80s hurt the economy much more than anything that Reagan did with his making the tax system much more regressive.

     I'm looking forward to Packer vs. the Lions. I know my friend Laura Superhero-AKA DemLaura-is pulling for her Lions today. I'm not sure if the surprise 7-3 Lions can beat the juggernaut 10-0 steamrolling Green Bay Packers and Aaron Rogers but Detroit has been very impressive and a fun team to watch with their improbable come backs-last week the again came back from a huge deficit of 24-7 to win 49-35.

    And of course I hope Miami upsets Dallas though I am not hopeful. Cheers!



  1. There's history in the Lions/Packers game. The last time the Packers started the season at 10-0, the 62' Lions, with Alex Karras, broke the streak on Thanksgiving Day. We can hope, but it should be the Pack. To your main point of the post: NGDP targeting basically amounts to inflating the economy. What do you think the odds are that the Fed would even consider this option? (About as high as the current discount rate.) I agree that the economy could use inflation right now. The political reality says otherwise. Remember, the batshit crazy people are driving the bus in Congress right now, with a little help from the Blue Dogs.
    Happy Thanksgiving. I'm off to Pa. to see the grandkids. Thanks for mentioning JazzB.

  2. I haven't really given much thought to NGDP targeting, except that I think it's a step removed from what the real target should be, and that's full employment.

    Somewhere recently I read a good takedown of NGDP targeting, but, since I don't really have a dog in the fight, didn't retain the link, or the nature of the argument.

    David Beckworth is keen on it, and I think Karl Smith is supportive. I'll say that anything expansion-directed would be an improvement.

    Still, it seems to me that NGDP targeting is tinkering at the margins, and no monetary policy can do much at the zero interest boundary. What we need is fiscal policy, and it's not forthcoming. The market monetarists never even give it a thought.

    The New Deal was clearly very effective, but all that knowledge has been systematically unlearned.


  3. I of course agree that I would prefer if the Fed said Full Employment is its first and overriding concern. Still check the link I left above about Dean Baker.

    Baker is a good progressive you can certainly at least trust his motivations and he says that progressives lack a proper appreciation of monetary policy-they don't understand it.

    The things that Volcker did were in many ways worse than what Reagan did-they in truth went hand in hand.

    I want Full Employment but there is more than one road to get there. Also in defense of the Fed-as Baker points out too-it is the only central bank which even gives equal weight to Full Employment-officially at least-the ECB in comparison has one mandate: price stability.

    What we need at the Fed is reform-not by way to abolish the Fed" a la Ron Paul and Murray Rothbard. It needs to be more accountable. The reforms Barney Frank has suggested are on the right track

  4. nanute thanks for the historical background. Good point! If I were the Lions head coach right now that would be my locker room speech to the team.

    Understand I am a Giants fan and hold neither team any ill will-only Dallas! If the Lions win it would show any doubters that they are for real. But if the Packers win that's a tremendouls achievement.