I often focus on Krugman Kontradictions, but here at Free Advice we have given examples of Sumner Shuffles. Now Scott is much more slippery than Krugman, so to get a true Sumner Shuffle is difficult. I’ve been checking his blog lately to see what he has to say about the Fed’s “taper” announcement–it was expansionary since the stock market went up, of course–but in so doing I ran across something that doesn’t add up.
Two days ago, Scott wrote:
Over the years my critics, and even some of my supporters, have said; “Sumner is basically proposing higher inflation as a solution.” That was never really true, I was proposing 5% NGDP, level targeting. And even though inflation would have been above 2% in the 2008-11 period, a stable NGDP policy would have prevented that inflation from having the sort of negative effects that economists see as resulting from high inflation. My plan would not have hurt savers, in aggregate.
Even so, there was a grain of truth in the claim. The inflation rate would have run above 2% for a number of years under my proposal. But now even that is no longer true. There have been enough wage/price adjustments to the lower NGDP growth rate that the SRAS has been shifting to the right. This means that today even a 2% inflation rate would produce a robust recovery. [Bold added.]
Now surely the above means that under Scott’s proposal, price inflation would not rise above 2%, or at least it would not be above 2% for the next few years. Right? That’s the only possible way the above statements can make any sense.
And yet today, Scott writes:
Today’s decision did not drop the unemployment threshold, but it weakened it. It should simply be removed. If they promised to wait until expected inflation rose to 2.5% before raising rates, it would mean roughly 2% inflation over the next few years, as the inflation rate is now running below 2%. That’s still too tight, but much better than the old policy, and even better than today’s revision.
I kinda think the people who said “Scott is basically calling for more inflation” could be forgiven for saying that, in light of comments like this. And now it seems that 2% inflation is “too tight,” whereas two days ago it would have produced a robust recovery.
One thing in closing: If someone says, “But Bob, Scott is calling for level targeting of nominal GDP growth…” that person will be locked in a shed with Major Freedom and Lord Keynes for 3 days.