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?