Morgan Warstler on Sumner's 'Wicked, Evil Genius'.

     As usual Morgan knocks it out of the park by being totally honest about it. 

     "After the word CHANGE, the second most used word by clinton running for office was INVEST. Govt would invest in… He met in early Jan ’93 with Greenspan, Alan told him, sorry Reagan spent all the money, so if you deficit spend I’ll have to raise interest rates."

    "And to get 4 more years in the big bird, Clinton sold all his team down the river, he put Greenspan on the dais next to Hillary for his ’93 SOTU – (from memory) literally tricked him into sitting there, to message to bond guys he was over the invest thing."

    "To the great surprise of most of his staff and all political observers, Clinton’s FIRST ACT as president was “Don’t ask don’t tell” Nobody could figure out why.And the answer was simple, it was the only thing he could do for his team that was FREE. It took no “investment.”

     "NOW let’s look at word INVEST. If Clinton BELIEVED any of his bullshit about govt investing, he’d have told Alan to f*ck off, bc when govt invested money, it was BETTER than when Greenspan kept down rates so businesses could invest it instead."

     "All of this is WHY, George Bush came into office and spent money like a drunken god damn sailor. All the way down the last $750B in stimulus bailout, the man was SMART to assume if he spent it, the next guy wouldn’t get to."

     "It is simply undeniable that the GOP took off when they stopped worrying about the deficit and began to worry about making sure that all the money got spent on things that didn’t reward democrat voters."

      "Now YES, scott won his debate with me bc when the economy got so shitty that GOP strategy got flipped over and pinned, we learned a crucial fact:

      "IF THE ECONOMY GETS TOO UGLY, we can’t Clinton all the future Democrat Presidents.

As such the core benefit to a nice level target policy either on GDP, inflation, wages, whatever, is that it takes the possibility of an Obama outlier befalling our nation, and if we use Scott Sumner’s terribly wicked genius plan…."

    "We can ensure that all future Democrats, never have any money to spend unless thye cut something else they like."

     http://www.themoneyillusion.com/?p=28466&cpage=2#comment-377353

     I appreciate this Morgan. If I described MM this way I'd be accused by the MMers of mischaracterizing their views. Scott would sputter with snark. However, a 'terribly, wicked, genius plan to straitjacket Democrats. That's always been my point. Yes it does sound a bit cynical if you're wondering about that. 

     Don't get me wrong I agree it's genius. I don't think the big liberals like Krugman and Delong appreciate it at all. The jury is out but there's no question that Sumner has been very successful. Krugman, Delong, Christina Romer, etc. have all given the idea of a NGDP target their blessing. 

    Meanwhile the 'little guy liberals'-places like Angry Bear Blog have totally bought in to a NGDP target without question. 

     On NGDP targeting a lot of the liberals seem to have bought it-the idea that a NGDP target is superior to an inflation target. Monetary offset is where there is-or should be-pushback. Maybe there isn't enough from my point of view. 

    What liberals may not get about MM is that for Sumner this is not a menu of choices where you can take what you like and leave out what you don't. Like Morgan's plan to 'auction the unemployed'. Conservatives aren't like liberals-there aren't really choices in their policies. You either accept them or you don't .

    For me it makes me skeptical even of the NGDP target though I have to admit the reasoning seems sound as to why you'd prefer it over an inflation target. Still I wonder if somehow accepting that you've already accepted monetary offset. 

    That's why the libs should be a little more cautious. They presume they can take the NGDP target and leave monetary offset. Even that I'm less than certain about. What seems clear to me is this. 

   A big part of what makes the terribly wicked plan so genius is the NGDP target. See Sumner's MM plan has two components. 

   A. That an NGDP target should replace inflation targeting

   B. Monetary offset

   If anything, A appeals especially to the liberal mindset-they find the whole idea of an inflation target unpalatable in the first place. Inflation targeting was already a conservative victory embraced by all those 'New Keynesians.' The inflation target totally thumbed it's nose at the alleged dual mandate. It stated pretty clearly that for the Fed there really is only one mandate. 

   So Sumner's proposal that we drop inflation targeting and replace it with NGDP targeting sounds like music to liberal ears. At this point they feel something approaching Pure Love. 

    Then Sumner gives us the fine print:  B. That they don't love at all. Yet they still can't believe that Sumner is as bad as all those other conservatives as he talks about doing away with inflation targeting. So for liberals the carrot is A, the stick is B. 

     For conservatives on the other hand, they aren't totally sure about A by a long way until they see B. Once they become convinced that the best, most surest road to B is A they embrace MM in full as Morgan-my favorite conservative-has. 

   If Sumner hadn't introduced A first he never would have gotten the level of regard and influence that he has. Because of it, he gets listened to respectfully by many centrists and liberals. In this it's fitting that the big financial benefactor for his project to develop an NGDP futures market is someone who claims to have donated to MoveOn.org. 

    http://www.themoneyillusion.com/?p=28363

  Again, I'll admit I'm not sure that the NGDP target isn't a good idea only that the main event for Scott is monetary offset and the target is just the sop to liberals to make it sound attractive to them. For that reason I think if you're a liberal you should be skeptical. Of basically anything Sumner says. 

  I would urge caution even with an NGDP target. It might be that you can use this without the monetary offset straitjacket but don't presume it without question. I'll be interested to see what research and other developments come about regarding an NGDP target. I too, certainly wouldn't miss inflation targeting but bare in mind that the NGDP target is just the sweetner for monetary offset where Democrats are never allowed to increase spending in absolute terms again. 

   Overall, liberals haven't been nearly skeptical enough. Krugman continues to batter Right wing inflationphobes without seeing that the most ingenious  conservative plan seems to cut inflationphobia off at the knees. Although Brad Delong is often accused of being a bad guy-because supposedly he erases comments that prove him wrong or so the Right wing commentators want to think-he's been very gracious to me over the years, linking me to more than one of his posts and even corresponding with me via email. 

    He thinks that Sumner more or less knows he overstates things and exaggerates and he thinks Sumner would be a waste of Krugman's time to worry about. I do wonder though if maybe Delong as well as Krugman and most liberals is underestimating Sumner here. 
 
     In the future Sumner's MM may be the conservative's only real move.