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Saturday, April 30, 2011

The usual.

You confidently assert that the Fed can control nominal GDP and chose a path below the trend line. Why not just cut out the middle man and say the Fed controls employment and chose a level below that of 2007 ?

Current Fed policy is, by far, the most expansionary in its history. Normally, the Fed works via the Federal Funds rate which is now essentially zero. People like you demanded more, so the Fed did much much more. We are currently nearing the end of QE2 which is a vastly huger series of open market operations than any under any Fed chairman other than Bernanke. I think there is no statistically significant evidence that the gigantic effort had any effect at all on the economy.

Yet you simply assert that future nominal GDP growth is a function of monetary policy. I know you are familiar with the concept of fiscal policy. You criticize Obama, Reid and Pelosi for failing to criticize Bernanke. How about criticizing them for calling for deficit reduction ? Their position on fiscal policy is contractionary. Bernanke is, by far, the most pro inflation prominent public official in the USA (quick pop quiz who's second).

Yet you are sure that he is the problem.

I ask for information (and await an answer) what hypothetical imaginary evidence could possibly convince you that you over-estimate the effectiveness of quantitative easing when the economy is in a liquidity trap. What could conceivably happen which would convince you and which hasn't happened already ?

I assume my complete inability to imagine any evidence reflects only my lack of fantasy. You have an outstanding imagination. Help me.

Here is another one. You believe that QE is an effective approach. You don't believe in so called supply side economics. You have, no doubt, noticed some difference between the approach to data analysis favored by advocates of the two different policies.

I have noticed no difference at all. Please find an example of some absurd special pleading by supply siders which I can't match with an essentially identical example from quantitative easers.

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