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June 23, 2013


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I know you disdain it as "looking good" - but given the immediate surge of ZIMWEIMARBABWE!!! any such public pronouncement would get from the newspapers, and other commentators and bloggers on the right, perhaps it's wisest to keep the discussion private.


What? History does not support the budget surplus/deficit fetish. I would also suggest it does not support inflating the debt away.

Growth in output, would appear to be the key, and the distribution of wealth.

There is no debate to be had, this is a dialog of the deaf. The Labour leadership are getting praise for following George Osborne's failed policies, with some asset inflation in the South East house prices due to the mortgage subsidy (not included in QE) giving the appearance of growth.

Won't Ed Balls look stupid if the housing market crashes as the subsidy is removed ?

Can you imagine the Tory glee, as soon as Ed Balls takes over a financial crash follows.

The economy is dysfunctional so full steam ahead with the failed policies of the past.

If I could only be in Australia to enjoy the spectacle from afar.

But at least the deck chairs on the Titanic are in good order.

Now who has the music for 'Nearer, My God to Thee'?


Has a party ever successfully stood on an explicit (or even implicit) platform of higher inflation? Andrew Jackson? I thought it was him who said "You shall not crucify man upon a cross of gold", but a couple of minutes oh google suggests it was William Jennings Bryan, who wasn't elected.


Ralph Musgrave

Chris wants to “loosen monetary policy”?!?! It’s already ridiculously loose. Not content with dropping interest to near zero, government and central bank have implemented QE which has the effect of re-inflating asset bubbles and making the rich even richer. No more of that, thankyou very much.

As to Laurence Ball’s idea that inflation should be raised to 4%, well it’s been around 4% for the last few years in the UK. And the benefits of that are what?

Luis Enrique

One explanation for falling real wages is higher real energy costs and negative terms of trade changes. I'm not sure how that data back that up, but if that's happening would a higher inflation target make a difference?

Everybody I have seen who objects to QE thinks its is causing price inflation but not wage inflation. Is there a coherent story as to why loose monetary policy might push prices up but not wages?

Doc at the Radar Station


FDR explicitly was pushing reflation of the price level in 1933:

Then, a large share of the public were farmers who produced goods they had to sell, so I think the selling of reflation was quite easy. However, now that people primarily depend on wages and salaries, they don't have the direct linkage and it might be tougher to advocate explicit inflation.


Labour seem pretty useless in all areas frankly.

No conception of any radical policies at all.

First they go on marches to protest against cuts then they say they will not reverse any cuts if they win the election. All seems rather pointless.

Paolo Siciliani

Your point 2 is like a zombie idea, it props up in your blog every now and then. You argue that whilst higer inflation squeezes real wages, it also reduces the real value of debt. How's that supposed to happen? Presumably because nominal wages adjust for inflation. Oh wait, what if they don't! Who cares, that's an issue of power, not a nominal problem. You and Simon and all you guys advocating NGDP or any other fancyful variant seems to willfully ignore the fact that when private households are busy deleveraging in a slack labour market (where given an already low labour productivity the risk of being made unemployed if demand doesn't return soon is high) they will react to expected higher inflation by further reducing consumption, since folks won't anticipate that they'll be able to defend the real value of their nominal wages. Hence, a vicious spiral of lower consumption demand, higher risk of unemployment and so on and so forth.
This was discussed at lenght in this very same blog more than a year ago. I expect it'll prop up soon possibly next year.

Paolo Siciliani

Oh, and btw, since you frequently like to claim the primacy of sound policies based on real data pattern, have a look at today's ONS publication (pp. 18-19 at http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q1-2013/stb-quarterly-national-accounts-q1-2013.html) showing both saving ratio and disposable income dipping at the same time - hardly evidence of people trying to protect the real value of their cash holdings, but of households dipping in their life saving just to keep consumptions levels flat in response to an erosion of the real value of their nominal wages. So do tell me, how on earth is raising inflation expectations suppose to work?


If Sasha holds true to the pattern from the first round, she should start perking up in the cycle of dieting but so hungry, losing weight
steadily and happily for weeks.

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