Should-Read: Paul Krugman (2015): QE Truthers

October 13, 2017

Should-Read: Anybody like John Taylor who has been wrong about just about everything since 2007—and who has refused to do anything to mark his beliefs to market—would be a really lousy choice as Federal Reserve Chair:

Paul Krugman (2015): QE Truthers: “Everyone knows about the infamous open letter warning Ben Bernanke not to engage in quantitative easing…

…many are also familiar with the remarkable unwillingness of that letter’s signatories to admit, after more than four years of low inflation and a rising dollar, that they were wrong. But not many people seem to know about an opinion piece by John Taylor and Paul Ryan, released at about the same time, that is even more revealing about the GOP’s monetary madness…. It attacks not just QE2… but QE1 — the Fed’s intervention during the chaotic post-Lehman period — which is generally considered to have been quite effective. Their evidence to the contrary? “QE1 failed to strengthen the economy, which has remained in a high-unemployment, low-growth slump.” Also, when I stepped outside this morning, it was cold, so I put on a coat — but it didn’t work, because it was still cold.

But the truly amazing thing is the conspiracy theorizing. The article is titled “Refocus The Fed On Price Stability Instead Of Bailing Out Fiscal Policy”, and the text matches that theme: “This looks an awful lot like an attempt to bail out fiscal policy, and such attempts call the Fed’s independence into question.”… Ryan and Taylor… accus[e]… the Bernanke Fed of deliberately betraying its mandate in order to help out Obama by monetizing deficits — or at least doing everything they could to convey that message to readers. And that’s one heck of a conspiracy theory…. Rand Paul by no means has a monopoly on monetary crazy, conspiracy theories very much included…

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