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The most important paragraph in Ben Bernanke's new book - Vox


Stashed in: Politics!, Current Inflation Fiat (USD vs the World)

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What's Ben Bernanke's case against NGDP targeting?Much of Bernanke's pre-Fed writing and academic work can be understood as broadly sympathetic to the NGDP targeting proposal, though he doesn't really address it explicitly. In his memoir, he for the first time lays out his full thinking. I have added some helpful margin notes:

This discussion is notable both for its brevity and for what it doesn't say — he doesn't really take issue with the analysis of Sumner, Romer, Woodford, or anyone else who thinks NGDP targeting is, in principle, a superior framework. He just raises practical objections, based on his experience actually running the Fed.

The recurrence of Congress as a theme, and Bernanke's doubt that NGDP targeting would even be "feasible" whatever the "theoretical benefits," is telling. Bernanke is saying that he thought an attempt to switch to NGDP targeting would lead to a political backlash and that his preference for avoiding this backlash isn't just a question of cowardice — it would be pointless to even try to announce the change, because the scale of the backlash would render it non-credible.

The only thing we have to fear is politicians themselves. 

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