Yes, the Fed's Target Is Now too High. Why Do You Ask?

This is wrong. It says Paul Krugman believes things he simply does not believe. Paul Krugman simply does not believe that "you can have any size deficit and still have full employment because the central bank can always establish the 'right size' interest rate to get you there". Not "always": sometimes. There is a point where the IS-Curve intersects the x-axis, and if you are not at full employment by then—if the neutral interest rate is below zero—then conventional monetary policy cannot get to full employment. Thus this response is simply not useful at all: Stephanie Kelton: Paul Krugman’s Four Questions About MMT: "Krugman...[is] asserting that you can have any size deficit and still have full employment because the central bank can always establish the 'right size' interest rate to get you there. I disagree...

Maybe some clarity could be achieved if Paul were to write "bond-financed expansions in government purchases with the central bank intervening to hold [the interest rate, trhe monertary base, the money stock] constant", and Stephanie were to write "money-printing-financed expansions in government purchases with the central bank doing [something]", but I doubt it. The fact that even I do not know why the canonical MMT IS Curve is vertical (construction responds very strongly to interest rates; wealth-dependent components of consumer spending respond substantially if less strongly) or what the canonical MMT LM Curve/central bank reaction function is makes me think this is not worth pursuing further. I am going to continue to interpret MMT as Abba Lerner: a steep IS Curve, and thus the ability to use monetary policy to insure that there is no government-budget constraint that binds when the stable-inflation constraint does not.


#noted

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