Sadowski leaves this comment on a Scott Sumner post:
"The latest thing among MMTers and Post Keynesians that I’ve observed in the blogosphere is to blame the higher inflation in the UK on monetary stimulus and fiscal austerity. Since they rarely have anything coherent to say this eventually gravitates towards ideological name calling. Yesterday I was called a Fox-watching Friedmanite (I don’t mind the Friedman so much, but Fox?!?)"
"One of the things I tried to point out was that monetary austerity eventually leads to fiscal austerity. In fact I cited the contrast between Poland & Sweden versus UK & the eurozone."
"But it is pointless citing empirical evidence to such ideologues. They are too busy planning the revolution."
Sure, I mean there are no Right wing ideologues. As a Post Keyensian I can only say flattery will get you everywhere sir. But the idea that monetary stimulus is linked with fiscal austerity is something I have argued before and the case has to continue to be made. To be sure the two don't necessarily go together. However I just note that while the Market Monetarists demand monetary stimulus they in the same breath want fiscal austerity.
Consider this recent post by Sumner. He quotes David Cameron with approval. Now I have called Scott a Paul Ryan Republican and maybe some think that unfair. Yet as I have argued if you don't think so name me one idea in the Ryan budget that you think he disagrees with on substantive grounds. I defy that there are any.
His praise of Cameron is another tell. Cameron is the British Paul Ryan. Of course in Britain he has more power in some ways that the US President does. Listen to the Cameron line that impresses him:
"Getting our debt under control is necessary for growth. But it’s not sufficient. Our responsible fiscal policy is being matched by active monetary policy. That’s the best way to support demand and help rebalance our economy away from debt-fuelled consumption and towards exports and investment. And the independent Bank of England is able to do more to support the economy if necessary or if inflation falls below their target."
"Fiscal responsibility and monetary activism is the right macroeconomic mix for our over-indebted economy. But the additional ingredient that government will deliver and needs to do even more of is a radical programme of microeconomic reform to make our economy more competitive – including competitive tax rates, planning reform and deregulation."
Of course "fiscal responsibility" means fiscal auterity. So Cameron is basically an NGDP targeter. We see the results so far. We have had somewhat higher inflation in the UK but it doesn't seem to be helping as Britian is in a double dip.
Again the endgame if fiscal austerity. Here's Sumner:
"So let’s see, how do we get austerity and stimulus at the same time? How about easy money and deficit spending? No, that won’t work. Tight money and budget surpluses? No. Tight money and big deficits? Hell no, that’s what we’ve been doing. That’s how we got into this mess. How about easy money and budget surpluses? Bingo. That’s a growing NGDP and budget surpluses—the Swedish way."
Yes that's the new thing now-neoliberals are praising Sweden as a paragon of austerity. Sumner tries to claim that we are doing deficit spending right now but this is misleading. Yes we have a budget deficit in the US but is this because of wild fiscal spending? Hardly. It's the drop in tax revenues and the automatic stabliizers.
Morgan Warstler as usual is more graphic-and honest:
"The point is, the gvt. has to bend before the ed does. Greece has to bend before Germany does.
Once you aren’t running a current account deficit, easy money can flow easily."
"Attention conservatives and all tardos who claim to be rational progressives… This is put up or shut up time. We can both shrink government AND put people to work. BUT, if you want to roll dice on not shrinking govt OR want to admit you don’t really care about unemployment like you claim…
You can keep playing the Karl Smith card."
"Karl, you hear me??? Everyone know you read this… To get NGDPLT, you have to :
1. not raise taxes
2. cut govt. spending
"Now you pig bastard answer me… do you still want NGDPLT??? Otherwise, launch your Sumner missiles now and let’s see what comes out in your career wash."
Well what could be more rational than to follow the guy who calls you a tardo and says we have to not raise taxes and cut government spending first before the magic of NGDPLT is unleashed?
Of course I'm sure Morgan would have voted for Herman Cain who wanted to raise taxes on everyone except the rich with his 30% sales tax.