Have you heard of Scott Sumner? Unless you're an economist, an economic blogger, or a student at Bentley University, where Sumner is a professor, you probably haven't. And that's a shame. Because there's an outside chance that he just saved the economy.

Sumner is the author of The Money Illusion, an excellent blog that has relentlessly made the case since 2009 for an eccentric policy called "NGDP targeting." This is a complicated sounding plan with a simple idea at its heart. If the equation that solves the economic crisis is "GDP growth + inflation = 5%" then the solution to low GDP growth is inflation that brings us up to 5%. Therefore, the Federal Reserve should announce that it will do everything in its power to raise inflation expectations until we're back to where we want to be.

Three years ago, this idea didn't have a stable home outside the wilderness of The Money Illusion. But it slowly gained credence among bloggers, economists, and finally, the Federal Reserve itself. In May, Chicago Fed President Charles Evans became the first sitting member to endorse the idea.



Yesterday, the central bank announced the closest thing to NGDP targeting that anybody expected: stimulus without end for the economy. Fed Chairman Ben Bernanke didn't announce a target as specific as 5% growth, but he essentially admitted that the central bank's start-stop policies were insufficient to help the recovery and that the duration of more stimulus would be determined by its outcome -- whether or not it brought the economy back to where we want it to be -- rather than by a dollar number of debt purchases.