About This Blog

Welcome to my blog on the interminable problems of macroeconomics, especially monetary policy. Veteran blog readers will quickly notice that I am not a common blogger, yet I could no longer resist the positive feelings about starting this blog.

All of the recent events(COVID-19 recession, AIT, etc.) show that we are on the verge of change. However, the most important problems of macroeconomics still remain unresolved, and many academicians still rely too much on useless models like the Phillips Curve. Indeed, one goal of this blog is to show that we have fundamentally misdiagnosed the nature of the business cycles and monetary policy. The intended audience is professional economists as well as others with a strong interest and background in macroeconomics.

For several years I have written floods on Twitter and Medium, especially on the Great Recession, business cycles, NGDP Targeting, and Market Monetarism. This summer I noticed that these places are unfortunately not suitable for me, I simply couldn’t fit in 280 characters. Moreover, I also saw that what I wrote was not read enough. Obviously, I read the economic debate on twitter but have no desire to get into it.  My views on interest rates and QE are so different from the rest of the econsphere that I don’t even know how to express myself in the debate or whether to be taken seriously. On Twitter, you have to come to the point as quickly and quickly as possible and explain in a few sentences.  Unfortunately, this is torture for me and not something I can do.  I needed long-running blog posts, not floods trapped in 280 characters. For me, Twitter is a place where people think fiscal policy is working or (on the side of right-wing economists)not working as nominal shocks are not important.  A place where central banks often run out of ammunition, where the interest rate is thought to be monetary policy. I could have tried to get into argument, but I don’t even know where to start.  People might think I came from Arrakis or spoke the Dothraki language.

Of course, I cannot list all my unusual thoughts in this post, but here are a few points that I find important:

  • 1. Recessions are always and everywhere a monetary phenomena.
  • 2. “Monetary policy can be highly effective in reviving a weak economy even if short-term interest rates are already near zero.”
  • 3. Changes in interest rates are not good indicators of the stance of the monetary policy.

The first point means that recessions are due to tight monetary policy that led to a sharp slowdown in nominal GDP growth. It is a point forcefully advocated by Scott Sumner, who is a market monetarist expert on the monetary policy. The second is a quotation from Mishkin’s monetary economics textbook. I know that many economists will disagree with me on the third point.  Therefore, I intend to explain it in more detail in my future posts.

At the same time, I know that a blog must be more interesting than a research paper, so I’ll circle around these issues. I’d like to mix together observations on current political or economic events, commentary on other economic blogs (Sumner, Beckworth, Selgin, Smith, etc).

Thank you for reading. I welcome any serious comments.

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Bruce

That is good things to start. I am excited to read your blogs. The world needs a new set of economic parameters that can handle the crisis. And current system can’t handle the current and upcoming crisis(I think there is echo of upcoming crisis)

Utku

How perfect can monetarist central planning of an economy get, teach us.