Nominal GDP, Scott Sumners, and Related Matters

    So as my last post indicated, Sumners has some interesting intellectual precursors. Again, this does not disqualify him. It does seem though as he is gaining influence a look at  his intellectual heritage is in order.

http://diaryofarepublicanhater.blogspot.com/2011/11/on-scott-sumners-intellectual.html

     While as I admitted in the above post, I am not myself an economist. I do think I have a decent idea about economics however as a layman. I do also believe that it's possible to be self taught. Some people who are economists and I do respect-the New Keynesians-have been supportive of NGDP targeting. Yet that one piece by Terence Corocan was cautionary-I think it was. I mean, saying that the upcoming debate will take us through an economic swamp sounds like caution!

     Sumners idea of NGDP borrows much, he tells us, from George Selgin. Mr. Selgin is an advocate of Free Banking-also a Cato Institute member to boot-and somehow thinks this idea takes us to a world where inflation is not low but eliminated. This seems paradoxical on its face as the whole point of NGDP as I understand the Market Monetarists-Sumner, et al-is that it's supposed to make the Fed less single mindedly focused on inflation fighting.

    Somehow Selgin sees this as a step towards eventually having an economy with no inflation-and significantly no Federal Reserve. He is a libertarian economic radical and believes the economy and monetary policy would be better without a central bank. How we get from point A-NGDP-to point B is what's so paradoxical. The way to start would be to read his book or whatever essays he has on the subject.

    But it is interesting as most of the New Keynesians, not to mention the Canadian Liberal MPs, Goldman Sachs, or Christine Romer aren't interested in anything like Free Banking-to say the least.

     NGDP targeting does sound like a good idea. But what those of us who are Keynseians have in mind is clearly quite different than Selgin. I would be interested to know how much someone like Sumners follows Selgin in his policy goals.