Hoisted from Comments: Nick Rowe on Economists' Intellectual Failure
Nick Rowe:
One thing I think is missing is this: how much of the failure of political will was really due to the New-Keynesian/Neo-Wicksellian perspective? "What the central bank does is set the nominal rate of interest, and so when the nominal rate of interest hits zero, it can do no more"?... It was less a failure of political will than an atrophy of thought about monetary policy. The grandchildren of Tobin and Friedman's marriage had invested all their inheritance in a single asset -- The Federal Funds rate.
