#Monetarism is almost dead, but helicopter money translates to the real economy. So, getting base money into the hands of the people would work. However, interest rates have to be monitored because so many bonds are being used as collateral. The banks are vulnerable.
#NGDP Targeting would create too much inflation for those bonds being used as collateral if #GDP was low, requiring a lot of inflation. There is a reason why the Fed stopped listening to Scott Sumner. And that is that these clearinghouses were created in order to protect the counterparties, but they use trillions of dollars of bonds. The Fed now has massive demand for bonds that will extend for many, many years, unless the clearinghouses themselves fail. Therefore, NGDP Targeting will not ever be accepted by the #CentralBanks, IMO.
Sumner was right about the Fed ignoring NGDP leading to the Great Recession. But now the Fed has insatiable demand for bonds and is content.
NGDP Futures Targeting – Still Doesn’t Work….
#Monetarism is almost dead, but helicopter money translates to the real economy. So, getting base money into the hands of the people would work. However, interest rates have to be monitored because so many bonds are being used as collateral. The banks are vulnerable.
#NGDP Targeting would create too much inflation for those bonds being used as collateral if #GDP was low, requiring a lot of inflation. There is a reason why the Fed stopped listening to Scott Sumner. And that is that these clearinghouses were created in order to protect the counterparties, but they use trillions of dollars of bonds. The Fed now has massive demand for bonds that will extend for many, many years, unless the clearinghouses themselves fail. Therefore, NGDP Targeting will not ever be accepted by the #CentralBanks, IMO.
Sumner was right about the Fed ignoring NGDP leading to the Great Recession. But now the Fed has insatiable demand for bonds and is content.