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I don’t comment on the Wall Street Journal very often, as they are behind a paywall. But I did read an editorial in a paper copy a few days ago, and as I recall the piece went on and on about how the Fed needed to be raising interest rates, without once discussing the Fed’s actual 2% inflation target. But they did have lots to say about unemployment.

Things sure have changed. When I used to subscribe to the paper version of the WSJ, they constantly lectured us on the fallacy of “Phillips Curve” thinking. They told us that the Fed should control inflation, and not worry about unemployment. They obsessed about the value of the dollar.

And now inflation is running well below 2%, and is expected to continue doing so for many years, and King Dollar is back in the foreign exchange market. But gosh darn it there must be some reason the Fed needs to raises interest rates, because . . . well, just because.

I’m amused when people suggest that market monetarism is losing out among conservatives. The only conservatives who seem to even have a coherent set of views on monetary policy are what Ross Douthat calls the “reform conservatives.” He mentions people like Ramesh Ponnuru, Jim Pethokoukis, Reihan Salam and Yuval Levin. Douthat suggests that reform conservatives favor:

e. A “market monetarist” monetary policy as an alternative both to further fiscal stimulus and to the tight money/fiscal austerity combination advanced by many Republicans today.

As far as the rest of the conservative movement – – – what are you waiting for? Moping around that interest rates are too low, just because, does not constitute a coherent monetary policy regime that will survive in the rough and tumble intellectual debate over public policy. (I.e., it won’t survive Paul Krugman attacks, and for good reason.)

On March 30th, I’ll be speaking in favor of NGDP targeting at the Dirksen Senate Office Building. I don’t feel at all lonely.

PS. It’s worth noting that many of the best people in what might be called the free banking movement (Larry White, George Selgin, etc.) are also sympathetic to a monetary policy involving a nominal income target, or something closely related. And I’ve found lots of support for MM at free market think tanks in places like Britain and Australia.

PPS. I have a new post on Stanley Fischer over at Econlog.

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This entry was posted on March 24th, 2015 and is filed under Market monetarism, Monetary Policy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or Trackback from your own site.



