I think you’re actually just not understanding Krugman right. He often writes misleadingly, so that’s understandable. The Fed’s normal tools perhaps can’t be used to do that (but they probably can), but the Fed’s normal tools are stupid and it’s easy to produce inflation with slightly different tools (negative interest rates on reserves, level targeting, targeting the forecast etc., credible promise to keep interest rates low). This isn’t some new theory, Krugman has a famous paper about how the Japanese Central Bank could do exactly that.
Having a target and achieving the target are definitely different things, but achieving an NGDP target is not difficult because central banks have approximately infinite control over a single future nominal variable (e.g. NGDP, nominal interest rate or price level).
One of the big lessons from central banks response to this recession is that interest rates and inflation are a very misleading and confusing ways to talk about monetary policy.
It’s much easier under these circumstances to do the same thing with fiscal policy rather than monetary policy: have the government borrow and spend to put idle resources to work directly, increasing NGDP by increasing real GDP. (This is how World War II caused the end of the Great Depression.)
I think you’re actually just not understanding Krugman right. He often writes misleadingly, so that’s understandable. The Fed’s normal tools perhaps can’t be used to do that (but they probably can), but the Fed’s normal tools are stupid and it’s easy to produce inflation with slightly different tools (negative interest rates on reserves, level targeting, targeting the forecast etc., credible promise to keep interest rates low). This isn’t some new theory, Krugman has a famous paper about how the Japanese Central Bank could do exactly that.
Having a target and achieving the target are definitely different things, but achieving an NGDP target is not difficult because central banks have approximately infinite control over a single future nominal variable (e.g. NGDP, nominal interest rate or price level).
One of the big lessons from central banks response to this recession is that interest rates and inflation are a very misleading and confusing ways to talk about monetary policy.
This is likely an incorrect understanding.