Seems a lot like market monetarism
The exchanges b/n Brent and I in the last post-led Brent to send me this link. It sounds like the Fed's announcement of a 2% inflation target is a stated commitment to Market Monetarism. NNGDP targeting can be seen as a form of asset price targeting, which is the inconsistency I was referencing in my last post. Inconsistency, of course, is not the problem so much as the unintended consequences of QE on businesses, savers, and governments (that I have discussed repeatedly on these pages). Ultimately, as risk and leverage pile up globally the question will be asked and answered as to whether "the Fed (and other CBs) can navigate the ocean of risk it is creating?". My opinion is that the answer will be no, and that this period of time will be viewed as a serious overreach by central banks (with significant buyers remorse in all quarters). While important others (including those in the Fed's inner circle) share my reservations, I acknowledge that my view runs counter to the mainstream. And it must be noted that CB policies have worked so far.
4/27/2013 06:16:36 am
Right now at the ZLB with relatively low inflation and relatively low real GDP growth both inflation targeting and NGDP targeting would have the Fed buying assets (assuming something like a 2% inflation target or a 5% growth NGDP level target) . At the moment in the U.S. they would motivate similar central bank actions.
4/28/2013 12:47:55 pm
I see these as differences of degree, while Brent sees them as differences in kind. From Brent's link:
4/29/2013 04:02:41 am
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