I rise to revise and extend my remarks
The gentleman is recognized for one more blog post.
So let me try this again.
Nominal GDP growth is a sum (sort of) of two things. Real Growth and Inflation. Both are outcomes. The two things are not highly correlated with each other. One of them we like and one of them we (usually) don't like.
MMTers (NGDPists) frequently show graphs where a decline in output is correlated with a decline in NGDP and exclaim something like, AHA! THE FED HAS CAUSED THIS DECLINE BY NOT KEEPING NGDP GROWING FAST ENOUGH.
As I was pointing out yesterday, that can be a very tricky case to make because the decline in output is baked directly into the decline in NGDP!
That's what I thought (and still think) Mr. Avent was doing yesterday. But I don't think I actually called him an idiot as he seems to think I did though.
But then again I am so dense that I fail to understand exactly how the Fed is supposed to precisely target NGDP. They've kept the policy rate at zero for multiple years and promised to keep it there for multiple years more. They have flooded the banking system with reserves. But NGDP has not grown fast enough. Now the Fed has promised to keep the pedal to the metal after the economy has recovered, will that get NGDP growth where the MMTers want it?
In all honesty, the most I've been able to glean from the NGDPers is that the Fed should announce a NGDP path they are going to defend and ......
Create a futures market for NGDP and target its price?
Rely on the reverence people have for Fed announcements and sit back and watch NGDP happily conform to the announcement?
I am also so dense that I simply cannot parse some statements made by the NGDP crowd. Like this one from Scott Sumner:
NGDP is “the real thing,” whereas P and Y are simply data points pulled out of the air by Washington bureaucrats.
The man who implores us to "never reason from a price change" is now informing us that distinguishing between price changes and quantity changes is irrelevant or impossible?
Or this one from Mr. Avent:
Even in tough times, some people get raises. Those people capture some of the growth in nominal incomes, leaving a smaller chunk available to go to new incomes.
That's a real puzzler to this Okie. The raises ARE growth in nominal income, aren't they? Or does the Fed pour nominal income over the economy like cereal and we all scramble to grab our share and eat it before it's gone? Nominal income is not an exogenously imposed constraint on the activities of the private economy. Nominal income is largely created by the actions of the private economy.
I guess I just don't speak MMT very fluently.
the gentleman's time has expired
thank you mr. speaker.