Is your view that the Fed should target NGDP based just on the difficulty of measuring the "right" inflation number correctly, or is it deeper? [For Scott Sumner it seems to be deeper, but I have never been able to pin hin down on exactly why NGDP is a better target than inflation.] Either way, if you do favor NGDP targeting, what is the principle on which we base the target, and would it be "flexible" in the way that FAIT is flexible?
The FED can start tightening after 2-3 consecutive quarters of > 5% N-gDp.
N-gDp
2020-01-01 -3.5
2020-04-01 -29.2
2020-07-01 39.7
2020-10-01 7.1
2021-01-01 10.9 begin tightening
2021-04-01 12.8
2021-07-01 9.5
2021-10-01 14.6
2022-01-01 6.2
2022-04-01 8.5
2022-07-01 7.2
2022-10-01 6.5
2023-01-01 6.3
2023-04-01 3.8
2023-07-01 8.3
2023-10-01 5.1
"Inflation is the one form of taxation that can be imposed without legislation." - Milton Friedman
Economists are generally vacuous. Economists don't know:
the difference between the supply of money & the supply of loan funds,
the difference between means-of-payment money & liquid assets,
the difference between financial intermediaries & money creating institutions,
doesn't know that interest rates are the price of loan-funds, not the price of money,
that the price of money is represented by the various price (indices) level,
that inflation is the most important factor determining interest rates, operating as it does through both the demand for & the supply of loan-funds.
The GOSPEL needs no DISCLAIMER
Is your view that the Fed should target NGDP based just on the difficulty of measuring the "right" inflation number correctly, or is it deeper? [For Scott Sumner it seems to be deeper, but I have never been able to pin hin down on exactly why NGDP is a better target than inflation.] Either way, if you do favor NGDP targeting, what is the principle on which we base the target, and would it be "flexible" in the way that FAIT is flexible?