So I’ve been convinced that I need a different context from melancholy defeatism to pushing growth. I actually thought that’s what I was doing, though I suppose through my grumpiness, unconsciously, the framing turned out differently.
When I think about which way to approach development of a counter argument, I generally listen to the other side of the argument first and think about what they are actually communicating in the simplest possible terms. Then I look for plausible opposite interpretations of the same words. For instance, some Fed members have publically stated fears of 1970’s style inflation, and of bubbles, the importance of the inflation target, and of central bank credibility and independence as reasons for doing too little too late to foster an expedited recovery, and that low interest rates mean an accommodative stance of policy.
Bubble hysteria is my favorite to tackle because it is a highly statist argument rife with contradictions of economic freedom and free markets. It says “We can’t trust people to do with their own money what they will. Thus, we won’t let them have any.” That in itself is wrapping a tourniquet around investments of all kinds, closing down access to capital markets for average people to start businesses or send their kids to college, or try to start a nest egg. And the worst of all, after the majority of people have been shut out of capital markets for fear they simply cannot be trusted, there is so much graft involved in crony capitalism, there will be exceptions made for those who supposedly can be trusted to invest wisely. Surely if people are concerned about inequality, the bubble hysteria argument is the last one they should be making, unless of course they don’t really care who gets to invest when we can just tax the bejeezes out of them. If they are well enough connected to participate in bubbles for the rich guys, would they end up paying the tax? I think not.
Some of these claims, however, are easy to shoot down without going to the trouble of opposite meanings with the same set of words. If I take all of those stated fear factors together, they could mean that inflation is obviously the wrong target because they are too afraid of all of the above compromising positions to try to hit it. Having an inflation target under the circumstances of the stated fear factors is about as useful to the job of a maintaining a prosperous economy as paratroopers with acrophobia are for battle or firefighters with pyrophobia are to house fires. When we need the job of hitting the target and staying on course done, we shouldn’t find FOMC members cowering under the desk muttering something about having enough inflation as long as it’s not >2%. And they want to be cowards independently in the largest economy on earth? The excuses and fears are all quite a bit of rubbish to me.
In fact it’s so much rubbish covering the real meaning of the pro-growth Fed mandates it asphyxiates the economy under inflation hysteria garbage so deep it could be compared to the landfill needs of metropolitan New York, Los Angeles, San Francisco, Atlanta, and Miami areas combined. Since when does “[the Fed] shall maintain monetary and credit aggregates commensurate with the economy’s long run ability to increase production…” mean we don’t give a crap about growth? Funny thing… the preamble is really the mandate – we will print enough money and allow enough credit so that we can keep increasing production until we can’t without lots of disturbance in prices or labor markets. It means GROWTH and the JOBS that come with GROWTH.
People who call Janet Yellen a dove don’t know what a dove is. A REAL dove would be extolling the virtues of a unique ability to tax foreigners and the underground economy that comes with widespread use of dollar denominated assets, and something from nothing that puts people to work producing instead of sitting on their tails so they can buy stuff and live financially autonomous lives, with social programs becoming obsolete. A REAL dove wouldn’t be talking about living off credit while she cuts the future path of monetary aggregates. Yellen says, ‘I won’t make the tourniquet quite as tight as my colleagues would.’ It’s just less hawkish rubbish.
We need growth. We need real central bankers, not certifiable inflation-targeting zealots who are afraid of their own shadows (concerning the myth that there is always a tradeoff between jobs and inflation with monetary expansion, means they are afraid of the the unemployed getting jobs). We need to say good-bye to inflation targeting and hello to NGDP-LT for measured growth rather than unmeasured economic asphyxiation.