Here he goes again. As usual he tries to argue that there's been no austerity in Britain because of its high budget deficit. What he never considers is that austerity actually generates more austerity. Simply cutting spending takes with one hand and gives back with the other.
Sumner claims of course to want monetary stimulus. Still he always seems to take the time to attack anyone who criticizes austerity. Now Krugman has apparently riled him by pointing out the strangeness of Tom Coburn now holding up Switzerland as a model for austerity.
Sumner gets more progressively shrill:
"In the world of Keynesian economics spending can soar much higher, and they’d still insist that austerity is occurring. If the Keynesians are to be believed we have savage cuts in government spending in America, despite data showing spending levels much higher than before the recession. You can cut the numbers anyway you want, and get whatever result you want. One of their favorite techniques is to explain away the high government spending by pointing to the depressed state of our economies, even though most private forecasters see this as the new normal, RGDP will never recover to the old trend line in either the US or UK."
Who are these private forecasters? Are their names all Tyler Cowen? I thought his whole point in NGDP is that we're below capacity? If we're already at the new trend why bother?
This again makes my point that Sumner's real endgame is not "stimulus" of any kind but austerity. This becomes clearer when you remember that while Sumner has said he favors a 5.5% NGDP target, some of his MM friends favor targets of 4.5%. 3.5% or as low as 2.5% At that rate we should be tightening now.
This is yet another example of why I see NGDP as just a back door to achieve austerity.