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Greg Mankiw vs. Himself

Mark Thoma tells us that Greg Mankiw calls for the Federal Reserve Board to be staffed by smart reality-based people like Peter Diamond who understand the importance of the Federal Reserve's committing to active lender-of-last resort policies prolonged monetary expansion and higher inflation in order to rebalance the macroeconomy to get it out of a liquidity trap:

Economist's View: Mankiw and Weinzierl: An Exploration of Optimal Stabilization Policy: We... examine the complications that arise because nominal interest rates cannot be set below zero.... [T]he optimal policy is for the central bank to commit to future monetary policy actions in order to increase current aggregate demand. Fiscal policy continues to be set on classical principles....

And yet Greg Mankiw also tells us that Senator Shelby has a definite point when he blocks Peter Diamond's appointment to the Federal Reserve because Peter Diamond is a big-spending Keynesian and TARP supporter who understands the importance of the Federal Reserve's committing to active lender-of-last resort policies prolonged monetary expansion and higher inflation in order to rebalance the macroeconomy to get it out of a liquidity trap.

May I say that this makes no sense?

To write articles that call for certain Federal Reserve policies as optimal entails that you should not also defend politicians who block the appointment of technocrats who would carry out such optimal policies.

Matthew 6:24 is relevant here: You can either argue that the New Keynesian framework is a useful technocratic one and derive and recommend optimal policies, or you can support ignorant right-wing politicians. You cannot do both.

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