Musings on economics and politics, with a special interest in free banking and monetary disequilibrium.
Lots of thoughtful blogging of late.But I think a 4 percent NGDP target is just too low. Monetary asphyxiation time. Maybe 5 or 6 percent NGDP is a good target.As, say, 6 percent, we know we are giving the engine plenty of gas, rewarding risk-taking etc. Yet, there is no threat off "runaway" inflation, as we are at 6 percent NGDP. Unless there is an actual contraction of economic output, the highest rate of inflation would be 6 percent. In a normal time, we might see 3 percent inflation--and btw, the Aussie Reserve Bank targets 2-3 percent inflation, and I think Israel does a 1-3 percent band target. Both those nations seemed to have sidestepped the 2008 recession.Prosperity should be the goal of macroeconomic policy.
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