My awesome lack of political prescience: fiscal vs. monetary policy

Way back in the early days following the financial crisis, I complained a lot about there not being enough talk of inflation targeting and unconventional monetary policy.  At the time I imagined that not doing enough on monetary policy in response to the  crisis would give rise to future monetarists who would claim, much as Milton Friedman did about the Great Depression, that all could have been avoided if only the central bank had done its job correctly.  I really thought vigorous monetary policy was the best hope for quelling the Great Recession. 

I was particularly disappointed in Paul Krugman for not pushing the idea of inflation targeting or other unconventional monetary policies more forcefully. (He clearly supported the idea, but said very little about it.)  After all, he had long been the main force underpinning this idea for Japan a decade earlier.

In hindsight, mine was a rather foolish prognostication.  Today's conservatives are nothing like Milton Friedman.  They are as against active monetary policy as they are against active fiscal policy.  Much of this may just be political convenience.  Perhaps they simply want what's bad for the economy because they see a bad economy as politically good for Republicans.  It's not hard to be that cynical, especially in today's political climate.

Anyway, I recollect all this in response to this post by Paul Krugman and this post by David Beckworth.


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