Monday, December 24, 2012

Robert Waldmann — On DeLong V Krugman

Monetary authorities using tight money to punish elected officials for violating Austerian doctrine strikes me as totally obviously what regularly happens (note your discussion of episodes of alleged expansionary austerity, in any case deficit reduction followed by high growth and speculate as to why Alesina claims that spending cuts work better than tax increases).

Basically the story that we have to do what Greenspan says or he will make US workers suffer makes a whole lot of sense to me.
Angry Bear
On DeLong V Krugman
Robert Waldmann

1 comment:

David said...

So this is DeLong:
"I think we were right then to fear and take steps to ward off the bond-market vigilantes--or perhaps only right to fear and take steps to ward off any Federal Reserve decision that it needed to fear and take steps to deal with bond-market vigilantes. In any event, our policies were right.

But that was then, with a 4%-point gap between 10-Yr and 3-Mo Treasury yields.

Today we only have a 1.6%-point gap between 10-Yr and 3-Mo Treasury yields."

So, I guess one would expect an old Clintonista to to defend the policies he helped craft, but it all sounds like eleventy dimensional chess to me. "We took steps to respond to how the Fed might react to what the bond market might have been anticipating, and moreover, we were right."

Yea, whatever, Brad.