Wednesday, January 26, 2011

Quasi-persecution of "Quasi-monetarists"

Paul Krugman nails what David Beckworth, Scott Sumner (the "quasi-monetaritss) and a few others I've communicated with and learned from in the past couple years have felt. Really, he nails what I've been feeling. A couple of times last semester I wrote draft posts trumpeting something like "I will go to my grave believing in something called 'aggregate demand,'" but then deleted them (though I did write this). I was not prepared that it would be remotely controversial to teach basic AD. (Krugman):

"Never mind that all I’m saying is what Econ 101 textbooks have been saying for the last 62 years."

As Brad Delong points out, more like "since 1829." Krugman:

"Friedman-type monetarists who focus on monetary aggregates, or the new style which says that the Fed can and should target nominal GDP — are, whether they realize it or not, part of the axis of monetary evil as far as the demand-deniers are concerned... they’re essentially in the same camp as Keynesians."

Hayek also believed in stabilizing nominal income and by the 1970s had adopted Friedman's view of the Fed and the Great Depression. So, the "demand-deniers" logically have to lump Hayek with myself and Friedman into the Keynesian camp too. (Sumner and Beckworth made that point a long time ago. They've been trying to save fellow conservatives from themselves).

Labels stink because realities are much more nuanced and complicated. I'm not interested in defending against or avoiding a label at this point. But once someone labels you it tends to stick. If wearing the label offends others, then they've basically offended themselves by the mis-labeling.

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