Scott Sumner: "'What Should The Fed Do?' Is The Wrong Question" →

Scott Sumner writes:

Several commenters asked me for a critique of Miles Kimball’s new post on monetary policy. I like him a lot, but I’m afraid this post will be mostly negative. Of course that’s not surprising, as Kimball is like 99.99% of other economists; he looks at monetary policy through the wrong end of the telescope.

I will definitely talk about nominal GDP targeting and the other issues Scott raises in future posts, probably not all at once, since there is a lot of meat there.

Here is my favorite passage in Scott’s post:

He also does the reductio ad absurdum of the Fed buying up all of planet Earth. I like that example, but (unlike Kimball) I’d characterize it is a success if it failed to boost NGDP. After all, wouldn’t it be nice if America owned the whole planet, and we could all kick back and live off the work effort of others?

Stephen Williamson: "Quantitative Easing: The Conventional View" →

This is a critical post about my third post “Balance Sheet Monetary Policy: A Primer.”  Stephen makes serious points that cannot be answered quickly and will have to be answered in the course of major posts sometime down the line.  For now let me just welcome his characterization of my viewpoint as “The Conventional View.”  What I said in my post may be controversial–as it should be given how new it is to use balance sheet monetary policy in a big way.  And I explain balance sheet monetary policy without pulling any punches.  But my views on this are fundamentally mainstream views about how the world works.  I am not out on the fringe in how I am looking at things.  

Reihan Salam: "Miles Kimball on Federal Lines of Credit" →

I want to endorse Reihan Salam’s statement that “FLOCs are best understood as a second-best alternative to counter-cyclical transfers, not as an ideal solution.”  There are probably better ways to stimulate the economy, but I think issuing FLOCs at the appropriate time is a feasible policy–well within the range of political possibility–that is much better than many things we have done in the past to stimulate the economy.