I too have no doubt that the central bank can cause hyperinflation or severe deflation. The question is, can it thread the needle and get levels where it wants them to be? If during a velocity shock like 2007-8, the only way to get 5% NGDP growth is to alternate between 200% NGDP growth and −47.5% NGDP growth, then it seems like the cure is worse than the disease, in terms of providing the kind of stable monetary expectations that MMs agree are necessary for economic growth, investment, etc.
Suppose we have a patient with a fever (or pneumonia). The doctor is unable to stabilise the patient’s temperature. It’s true that if we throw her in an ice floe she’ll be too cold, and if we throw her in an oven she’ll be too hot, but that doesn’t prove that we can stabilise her temperature, and I sometimes feel that Market Monetarists are coming uncomfortably close to making this argument.
I doubt that there will be that much variation since even if you look at it, you are considering a sale of assets or a purchase. There are thousands of such transactions happening everyday. That range of fluctuations doesn’t happen. I’m not great fan of central planning, but I think that NGDP or nominal wage targets are possible to hit without a 100% variation.
I too have no doubt that the central bank can cause hyperinflation or severe deflation. The question is, can it thread the needle and get levels where it wants them to be? If during a velocity shock like 2007-8, the only way to get 5% NGDP growth is to alternate between 200% NGDP growth and −47.5% NGDP growth, then it seems like the cure is worse than the disease, in terms of providing the kind of stable monetary expectations that MMs agree are necessary for economic growth, investment, etc.
Suppose we have a patient with a fever (or pneumonia). The doctor is unable to stabilise the patient’s temperature. It’s true that if we throw her in an ice floe she’ll be too cold, and if we throw her in an oven she’ll be too hot, but that doesn’t prove that we can stabilise her temperature, and I sometimes feel that Market Monetarists are coming uncomfortably close to making this argument.
I doubt that there will be that much variation since even if you look at it, you are considering a sale of assets or a purchase. There are thousands of such transactions happening everyday. That range of fluctuations doesn’t happen. I’m not great fan of central planning, but I think that NGDP or nominal wage targets are possible to hit without a 100% variation.