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Wednesday, December 28, 2011

Market Monetarism: Frontline of Revisionism?

     This whole question of market monetarism, NGDP targeting, etc. I have puzzled out. While the idea on it’s face seems like it could do some good, some of the positions the market monetarists take in the “real economy” are not reassuring,

     I have recently read quite a bit of Lars Chistensen’s Market Monetarist blog. In many ways he provides more of a systematic presentation of MM views than you find even at Sumner-evidently, while Sumner is perhaps the best well known, Christensen evidently coined the MM term.

    Yet it seems to me that many of the Right wing attempts at revisionism are applied too by the MMs. You have Sumner claiming,

    “Krugman has zero credibility on this issue, as he has an agenda and his past assertions about F&F have been shown to be factually inaccurate. I have always favored abolishing F&F, “privatization” does no good when our Congress is this corrupt. Maybe it would work in Denmark, not here.”

    “The reason people like Krugman don’t understand what caused the crisis, is that they don’t know what the crisis is. The crisis is bailouts and recession, whereas Krugman thinks it’s the housing bubble. The housing bubble didn’t matter at all. What matters is taxpayer bailouts of the GSEs and FDIC.”

      This attempt to revise history by the conservatives is being practiced by the market monetarists too. In some ways, as a Keynesian, market monetarism, or monetarism, period sounds much more palatable than say the Austrian school which tends to embrace deflationism. Yet it depends, unlike a recent piece by Lars, they don’t deny the reality of bubbles and their importance.

      Monetarism is more like Keynesianism it might seem as it at least believes in monetary stimulus if not fiscal-in fact monetary stimulus is supposed to obviate the need to ever had fiscal stimulus-but it’s interesting here too that Christensen insists that “monetary stimulus” is really badly named that what monetary policy is supposed to do is make the economy work like laissez faire demands it should. Whether or not this is a certain conceptual dissonance of monetarism to try to claim that aggressive monetary policy makes an economy more rather than less laissez faire, the fact is that it’s been a very effective political weapon wielded against Keynesianism.



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