Wednesday, April 25, 2012

Brad on Ben and the Borg

Department of Huh ?

Borg assimilates Ben.  Although it is forbidden, he must wear the ring to escape.  Third pop culture reference here.

Ben is not being logical.  You can't argue that higher inflation would be worse, because it leads to higher inflation then next time the Fed takes extraordinarily accomodative actions.

The argument is that a higher inflation target would help during this liquidity trap, but it means that just fed funds rate of zero plus new QE1 and QE2 would cause higher inflation then next time we are in a liquidity trap. And that would be bad because ...

Sure sounds to me as if he's been assimilated by the Borg. The claims that Low inflation and the reputation for being obsessed with low inflation are good is dogma.  There is no need for a rational defence.  Rather, it must be right, because it is so implausible.  Anyone can see how higher inflation causes lower real interest rates, but only an adept who has been to the inner sanctum can understand why Ben must never ever wear the ring.

1 comment:

  1. I called it.