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.”
The United States has already hit its debt ceiling--the legal limit of the amount of money it is allowed to borrow, as established by Congress. Right now, the U.S. Treasury is resorting to "extraordinary measures" to keep paying the country's bills.
Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.The article below comes courtesy of Central Bank News, an authoritative source on monetary policy developments.
AUSTIN, Texas (Reuters) - The Federal Reserve may have more latitude to pursue easy-money policies if inflation runs below its newly-set 2-percent target, though such a move does not guarantee more jobs, a top central bank official said on Thursday.
Reuters - The Federal Reserve may have more latitude to pursue easy-money policies if inflation runs below its newly-set 2-percent target, though such a move does not guarantee more jobs, a top central bank official said on Thursday.
Yves here. Some readers are likely to recoil at the idea that more inflation might be a good thing. But the flip side is that economists are still fighting the war of the 1970s. The 1970s stagflation was the result of a specific set of conditions that look very remote now: a recent past of budget deficits when the economy was already strong leading to currency depreciation (Nixon going off the gold standard) which also hurt the Saudis (who lost out because oil was denominated in dollars), leading them to retaliate with oil price increases.
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.