ALL BLOG POSTS
Last week the Bank of Canada and Canadian government announced - not overly surprising - that it will continue its 2% inflation targeting regime.
A lot of the debate about how to escape the Great Recession is focused on the question of deleveraging and it is often said that we have entered a period of more or less permanent low growth – a “New Normal”. I fundamentally think the idea of the new normal theoretically and empirically flawed.
Steve Roth over at www.asymptosis.com has a comment on my previous post ”Be right for the right reasons”, which in itself was a comment on Richard Williamson who had commented on one of my previous comments (“NGDP targeting is not a Keynesian business cycle policy”) so you might consider this as ponzi-commenting…Anyway, Steve’s comment deserves an answer. He has some intriguing ideas.
Richard Williamson has a comment on my earlier post ”NGDP targeting is not a Keynesian business cycle policy”.
I have come to realize that many when they hear about NGDP targeting think that it is in someway a counter-cyclical policy – a (feedback) rule to stabilize real GDP (RGDP). This is far from the case from case and should instead be seen as a rule to ensure monetary neutrality.
Anybody who has been working on a trading floor will know the adrenalin rush one will experience when one of the major sets of macroeconomic data is published – for example US nonfarm payroll numbers. I think most dealers and analysts will recognise this and will acknowledge that it could become nearly addictive to get that feeling. However, I think that this might be a thing of the past due to the technological development.
Recently I in a post came up with what I described as a crazy idea - that might in fact not be so crazy.
The all-knowing David Glasner has a fantastic post on his blog uneasymoney.com putting the euro crisis into historical perspective. Glasner - as do I - see very strong parallels between the European crisis of the 1930s and the present crisis and it the same "gold standard mentality" which is at the heart of the crisis. Too tight monetary policy and not overly loose fiscal policy is really the main cause for the European crisis.