"Market monetarists around the world argue that central banks can always fight off slumps, whatever is thrown at them. But to do so policy-makers must stop targeting inflation -- the wrong variable, indeed a particularly bad variable -- and instead deploy nuclear force to drive up nominal GDP to a trend line growth rate of 5pc, doing so transparently so that markets know exactly what the objective is and when the stimulus will be unwound.
I have no doubt that this would bring about a full recovery very fast if conducted with enough panache, but is it possible to marshal political consent for such revolutionary action?
The Tea Party Congress, like Europe's bourgeousie, would rather wallow in liquidation, Puritan cleansing, and mass default than tolerate the possibility of a solution.
To those who excoriate monetary stimulus as some form of devilry -- most readers it seems -- my question is whether would you rather see bigger deficits and bigger publics debts instead. Because that is exactly what you get if central banks fail to act in a slump, if you don't lose you democracy as well.
Pick your poison."
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9401574/Fed-fiddles-as-America-slides-back-into-recession.html
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