Paul Krugman is now so far into outer space with ridiculous economic proposals that even Helicopter Ben Bernanke recognizes Krugman's proposals as "reckless".
Bloomberg reports Bernanke Takes On Krugman’s Criticism Ignoring Own Advice
Federal Reserve Chairman Ben S. Bernanke took on Nobel prize-winning economist Paul Krugman yesterday and called his advice to reduce unemployment by boosting inflation “reckless.”
David Beckworth submits: Two recent articles speak to the advantages of a nominal GDP level target over a price level target. The first article is from The Economist which discusses a price level target but in so doing actually builds the case for a NGDP level target.
MARK CARNEY, named late last year as Mervyn King's successor as governor of the Bank of England, wasted no time in setting high expectations (so to speak). In a December speech Mr Carney reckoned that a central bank facing a demand shortfall while stuck at the zero lower bound might do well to adopt a new target: a level of nominal GDP. He noted:
Brad DeLong submits:
First, the question is not whether the Federal Reserve should raise its target inflation rate above 2% per year. The question is whether the Federal Reserve should raise its target inflation rate to 2% per year.
China is likely to raise next year's official inflation target and tighten monetary policy, state media said Wednesday, amid expectations for consumer prices to continue rising.The Central Economic Work Conference, which is expected to meet next month, will probably hike the government's annual inflation target to 4.0 percent from 3.0 percent this year, the China Business News said, citing an unnamed source.
Ed Zimmer submits: There are any number of ways to say it, but it all comes down to the same thing. The Federal Reserve has reached the rock and a hard place position when it comes to the Federal Reserve Rate. According to the US Treasury, the cost of paying the interest on the national debt was 413 billion dollars in 2010. Despite the fact that our national debt at the time reached 13.5 Trillion, that was not a record, it was barely an effective rate of 3.05%.
Bank of England Governor Mervyn King said today that inflation will “probably fall below target as the substantial degree of spare capacity pushes down on prices.” This runs into a problem, shown in my first chart. In recent years, spare capacity - as measured by the ILO unemployment rate - has not pushed down on prices*. Quite the opposite.