I refer to types of Fed policy, of course.
In a recent post criticizing the mental gymnastics Bernanke engages in regarding helicopter money, Scott writes:
Or we could just raise the inflation target to 3%.
Or even keep it at 2% and do level targeting. Or NGDPLT. All these epicycles to make helicopter drops work make me dizzy. The simple truth is that monetary policy is all we need if used intelligently, and if not used intelligently (as in Japan pre-2013), even helicopter drops won’t get the job done. So let’s K.I.S.S., and work out fallbacks that don’t require wildly unrealistic assumptions about cooperation between the Fed and a GOP-controlled Congress. Instead let’s simply shift the target slightly (4% NGDPLT anyone?), and perhaps add to the securities that the Fed is eligible to buy.
Yes, by all means, let’s switch from the Fed focusing on (price) inflation and unemployment, and instead have the Fed target the growth in the total amount spent on value-added in each stage of production (to avoid double counting), with a provision of catching up to the constantly rising level, where the Fed turns over day to day operations to a futures market in contracts that can only exist through subsidies from itself, and where the Fed is allowed to buy other types of assets from what is currently legal. Like the man said, simple. None of this newfangled stuff like “printing money and spending it.” (What?!)