For MMers CNBC is Part of Keynesian Conspiracy

     Sumner was again recently claiming that the very idea that Japan was in a recession last year is just absurd. Yes, they had 2 straight quarters of negative GDP, but they had falling unemployment during the same period-so, no recession, obviously, because if you have low unemployment there's no recession right?

    "Japan did experience two quarters of falling RGDP in 2014, but (despite press reports to the contrary) certainly did not experience a recession.  Or if it did, it would be the first recession year in human history associated with a significant fall in the unemployment rate.  If we could have a “recession” that brought down our unemployment rate to 3.4%, I’d be thrilled."

    http://diaryofarepublicanhater.blogspot.com/2015/02/scott-sumner-wants-his-critics-to.html

    It's rather ironic-though Sumner seems not to understand irony-that in a post that he claims his critics don't respond to actual MM positions, he ignores the positions of most actual economists who judge a recession not by the unemployment number but 2 straight periods of negative GDP. This is a pretty convenient definition of recessions as Japan always has very low unemployment. I mean Japan has been subject to a Great Stagnation for 25 years, yet during this entire period you never had unemployment above 6%. 

   Where is it written that if unemployment is beneath a certain level an economy can't be said to be stagnating or in recession? Of course, a large part of what caused the recession was the consumption tax which isn't supposed to matter because of monetary offset. 

   Yet, he wants us to believe that there was no recession in Japan, just a Keynesian conspiracy to call it such. I guess the conspriacy is at CNBC as well. 

    "Japan's economy crawled out of recession in the fourth quarter of 2014, data on Monday showed, although the growth figures came in much weaker than expected."

   "Gross domestic product grew an annualized 2.2 percent, helped by a rebound in exports, but the figure missed a Reuters poll expecting a 3.7 percent gain. Quarter on quarter growth was 0.6 percent, lower than the 0.9 percent consensus."

   "Japan's economy slipped into technical recession in the third quarter after shrinking 1.9 percent and following a revised 7.1 percent contraction in the second quarter."

    "The economy got clobbered when consumers stopped spending following a rise in the nation-wide consumption tax to 8 percent that took effect last April, forcing the government to postpone a second sales tax initially due this October."

     http://www.cnbc.com/id/102423577

     The whole reasoning behind the sales tax was borne from too much listening to the Austerians-not Austrians though they are Austerians themselves-who worry about public debt above 90% of GDP even with recession or stagnation and even though Japan has the lowest interest rates in the world. The Reinhart and Rogoff types never can explain why interest rates don't rise. 

    I have to say that Kenneth Duda-Sumner's benefactor on the NGDP futures project that has enabled him to leave teaching-sounds pretty reasonable. 

   "My objective is to build consensus, not win some academic fight. Thus, my biggest concern with market monetarism is the label. I don’t really want to be a “market monetarist” and enter some fray against Keynesians and Austrians and Neo-fisherites and Neoclassicals. Instead, I want to consider a policy regime consisting of NGDPLT (ideally via NGDP futures pegging), plus automatic fiscal stabilizers if NGDP falls too far below target for too long. (I prefer across-the-board tax credits as the automatic fiscal stabilization mechanism, but am open to other ideas.) Call this New Consensus Monetary and Fiscal Policy (NCMFP). It would be a *massive* improvement compared with current policy. Massive. No more 2009, 2010, 2011, or 2012. It should be something that that everyone from Krugman to Cochrane could get behind as, maybe not optimal, and they’d all have different gripes, but maybe they can all agree that this combination is better than current policy. This would be a consensus policy view that we can all push forward, and set aside our somewhat different models and a different intuition about which model fits the real world the best at any given time."

   http://www.themoneyillusion.com/?p=28674#comments

    In his answer to my comment he says I can call him Ken. Sounds like a nice, intelligent guy-with some deep pockets. Listen, I'm not wishing failure for Scott here though we'll see what happens. Apparently there are some real questions about NGDP futures. 

    Still, I think he's being pretty uncharitable to Krugman here. 

    "It’s classic Krugman. Nothing he says is untrue, but he makes it sound like there’s nothing the central bank can do because of IS/LM, well sure they should try stuff but it probably won’t work, unless they have a real regime change but that can’t happen, therefore fiscal stimulus, which we should be able to do so easily."

  "Except that we can’t do fiscal stimulus easily, because, you know, Republican-controlled congress. It would be easier to have a regime change in monetary policy than it would be to get fiscal stimulus through this congress or the last one. Instead of bemoaning the impotence of conventional monetary policy at the ZLB, Krugman should be advocating for NGDPLT. Why isn’t he? The only thing he’s written about it that I can find is here:http://krugman.blogs.nytimes.com/2014/07/21/asymmetrical-doctrines-vaguely-wonkish/. All he does is points out that MM doesn’t have the support of democrats or republicans, and therefore (by implication) is irrelevant. It’s just so wrong. “Let me know when our critics respond to our actual ideas.” — now who said that? So that’s why I’m irritated with Krugman. I suspect he is deliberately avoiding NGDPLT because he’s smart enough to see it might work, and that would take the wind out of the sails of the case for the fiscal things he wants to do."

  

    " > though willing possibly to be convinced."

   "Do you really believe Krugman is “willing to be convinced” about NGDPLT? Given what he’s written about it?"

     Well, he's been more open to NGDPLT-though his preference has been a 4% inflation target-than say Sumner has been to using fiscal policy as part of the solution. 

     Still, if the goal is consensus like Ken wants, he's right it's better to avoid the kind of food fights Sumner seems to relish with talk of winning bets and driving a stake through Keynesianism.