An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
A bit off topic, but another “absolutely ridiculous modelling assumption” I’ve just stumbled across is one used by Scott Sumner to back his “market monetarism”. You’ll find it in this Mercatus article (to which Scott himself directed me so as to help me benefit from his wisdom):
His way of trashing fiscal stimulus is to argue that if monetary stimulus looks like achieving its objectives, the Fed will negate or offset any fiscal stimulus, which proves fiscal stimulus is no good. Well true, that is indeed what the Fed will do. But the argument is exactly the same as saying that if you have two brands of washing powder to do your clothes with, and you choose to use powder X rather than powder Y, that proves powder Y is no use.
2 comments:
A bit off topic, but another “absolutely ridiculous modelling assumption” I’ve just stumbled across is one used by Scott Sumner to back his “market monetarism”. You’ll find it in this Mercatus article (to which Scott himself directed me so as to help me benefit from his wisdom):
http://mercatus.org/publication/why-fiscal-multiplier-roughly-zero-0
His way of trashing fiscal stimulus is to argue that if monetary stimulus looks like achieving its objectives, the Fed will negate or offset any fiscal stimulus, which proves fiscal stimulus is no good. Well true, that is indeed what the Fed will do. But the argument is exactly the same as saying that if you have two brands of washing powder to do your clothes with, and you choose to use powder X rather than powder Y, that proves powder Y is no use.
"Well true, that is indeed what the Fed will do."
Not if the chairman want to stay in a job they won't.
The central bank supports the government in an elaborate charade.
Any central bank governor that crosses the elected government would cause a constitutional crisis.
As Bernanke himself said 'we are the agents of the Treasury and we do what they ask us to do'.
Post a Comment