TravisV pointed out an exchange between Lars Christensen the Scott Sumner regarding Lars’ claim that the Fed has been following a 4% NGDP growth target with Scott still on the bearish side, saying that the NGDP growth rate of late has been more or less a happy (or less miserable) accident rather than from credible policy (Lars’ posts are here and here, Scott’s is here).
One thing I noticed in one of Lars’ post is a suggestion that with the Fed on a steady NGDP growth path, the real skunk in the room is the ECB. It’s true. The least dirty shirt in the bag of dirty laundry is probably the Fed, tied closely in first place with the BoJ. These central banks have been down the road of hardcore inflation targeting that I once was so pessimistic to believe was one-way only. But they have been doing better lately. I just keep my fingers crossed that they don’t blow it because neither has adopted level targeting, let alone the NGDP variety. But to Lars’ point, the ECB is still incredibly lost and citizens of the EZ are still suffering financially with no relief in sight.
Obviously, living in the United States, issues with the Fed are very high on my priority list. I’ve lived life as a member of Fed’s “the sacrifice ratio” and it wasn’t exactly the thrill of my life. I don’t want to be on that ride again, nor do I want that to happen to my kids. Therefore, ensuring IT at the Fed dies the death it deserves was, for a time, my primary focus.
But given that I have the understanding of what it is to be a member of the sacrifice ratio that only first hand, personal experience can offer and the ECB has created a much larger and seemingly permanent membership, I’d like to announce my solidarity with those members of the EZ sacrifice ratio. I’d be happy to shift my focus in order to support them because I am positive they are in real need of relief. All Lars had to do was ask.
Though, I do have a bit of a logistical problem as most of the news I find is US-oriented, and I don’t see many stories about members of the ECB that aren’t tainted through Reuters’ extremist monetary activist lens. Looking at it that way, it’s hard to tell with which force I have the bone to pick. So, I might need some help getting started; maybe some pointers on where to find EZ market news that I can read (in English is preferable to Google translate so that I can get accurate quotes).
I will also need some help understanding the EZ monetary system. It appears to be different than the Federal Reserve System, with the CB’s in each country having different functions than the regional branches of the Fed. I remember noticing in 2012 that the Bundesbank was selling lots of assets, perhaps trying to sterilize the inflow of capital from the periphery. I think I made a post about it back then, but I was unsure if that had any macro effect (I thought it might) so I abandoned it. I don’t wish to end up sticking my foot in my mouth or spread bad information if I can avoid it.
With that said – it’s now open season on the ECB!