I have been running into the ongoing debates on nominal GDP targeting, and whether it is superior to inflation targeting. To look at this debate, I need to put my “conventional economist” hat on, as if one accepts the heterodox view that interest rate policy is ineffective, the entire debate is pointless (neither policy “works”). As will become apparent, I think the neoclassical models behind the debate are dubious. But if we accept that interest rates at least sort-of work the way that they are conventionally assumed to (e.g., rate hikes dampen growth and inflation), we can have a view on how a change in targets would work in practice.
There's an old saying we've all heard, "follow the money". Isn't it funny how, no matter how you twist orthodox economics (Fourier analysis indeed) or ignore heterodox, the money always flows in the same destination - to the wealthy.
So here's an alternative view given today's vast inequality, why we don't just let inflation rip while pumping money in at the bottom - increasing the minimum wage, pensions, education and health spending etc. - to protect the poor (even make them better off) but do nothing for the wealthy so their speculative gains are depleted. Instead we ('independent' - groan - Central Banks) do the opposite - send high interest 'wealthfare' cheques to the wealthy and impose austerity on the poor. It's shear madness!
Of course, when the shoe's on the other foot and it's welfare cheques then we need means testing, offering food stamps instead of money - the whole gamut of nasty policies to show our contempt for the recipients of public 'largesse'. Maybe it's what we need for the wealthy too - theatre ticket 'stamps' or expensive car stamps or whatever other stamps instead of wealthfare cheques. Just to make sure that when the wealthy spend their public money they're suitably humiliated and demonized. And, of course, we should leave all this in the hands of 'impartial' Central Banks.
There's an old saying we've all heard, "follow the money". Isn't it funny how, no matter how you twist orthodox economics (Fourier analysis indeed) or ignore heterodox, the money always flows in the same destination - to the wealthy.
So here's an alternative view given today's vast inequality, why we don't just let inflation rip while pumping money in at the bottom - increasing the minimum wage, pensions, education and health spending etc. - to protect the poor (even make them better off) but do nothing for the wealthy so their speculative gains are depleted. Instead we ('independent' - groan - Central Banks) do the opposite - send high interest 'wealthfare' cheques to the wealthy and impose austerity on the poor. It's shear madness!
Of course, when the shoe's on the other foot and it's welfare cheques then we need means testing, offering food stamps instead of money - the whole gamut of nasty policies to show our contempt for the recipients of public 'largesse'. Maybe it's what we need for the wealthy too - theatre ticket 'stamps' or expensive car stamps or whatever other stamps instead of wealthfare cheques. Just to make sure that when the wealthy spend their public money they're suitably humiliated and demonized. And, of course, we should leave all this in the hands of 'impartial' Central Banks.