James Alexander via Historinhas | Scott Sumner made a somewhat light-hearted comment in a recent post that “no-one can predict recessions”. It made me stop and wonder what was the point of Market Monetarism in that case. The essence of MM is that market forecasts of NGDP Growth should guide monetary policy, should be monetary policy.
James Alexander via Historinhas | There is only monetary policy, defined as the value of money relative to real goods and services. All else is just tools: official short term policy rates, IOER, targeting or guidance, QE, fiscal policy. In the “monetary offset”, the tool of expansionary fiscal policy is offset if the overarching policy tool is inflation targeting.
SAO PAULO | By Marcus Nunes | Five years ago, the former Treasury official who created the “Taylor Rule,” a formula for rate- setting based on the outlook for inflation and growth said that “the Federal Reserve may soon need to raise interest rates”. Five years later, economist Scott Sumner affirmed that “promising year after year of near zero rates is like promising year after year of sub-par nominal growth”. Five years on the “winning prediction” is obvious.