Smart words always come out when one reviews Robert Hetzel

And Arnold Kling is no exception:

The Fed was very successful at bailing out large financial institutions. It was a failure at maintaining nominal GDP growth. You would think that this would make the Fed highly vulnerable politically. However, the political right protects the Fed by raising false alarms about inflation, thereby arguing for monetary policy to be tighter, not looser. And the political left protects the Fed by insisting that things would have been much worse without the bank bailouts and by insisting that we are in a liquidity trap.

While not an MM card carrying member he´s shown ever increasing sympathy:

As you know, I do not buy into textbook macro. But textbook macro has a nonzero probability of being correct, and if it is then the Fed ought to set an aggressive target for the level of nominal GDP and do whatever it takes to hit that target.

HT David Levey

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