Here is a prime example of the kind of nonsense that passes for economic wisdom at the Jackson Hole meeting.
In a lunch address by Princeton University economist Christopher Sims, policymakers were told that it may take a massive program, large enough even to shock taxpayers into a different, inflationary view of the future.
“Fiscal expansion can replace ineffective monetary policy at the zero lower bound,” Sims said. “It requires deficits aimed at, and conditioned on, generating inflation. The deficits must be seen as financed by future inflation, not future taxes or spending cuts.”
Ever hear of Abenomics, Mr Sims? Oh I know, not large enough. Please.
I think it is obvious that you can’t finance anything with inflation. Latin America has been trying that for years, with disaster after disaster ensuing. Right now I am looking at a framed Zimbabwean hundred trillion dollar bill. This obsession with creating inflation, obviously intended to devalue the enormous pile of debt that Keynesian policies have created, is possibly the most dangerous and ludicrous aspect of the madness that has seized mainstream economists.
It is a perpetual search for the magic bullet that will resolve the economic failure of liberal socialism, which is playing out around the world. Economists seem to believe that just because the Keynesian free lunch has failed to materialize doesn’t mean that it can’t be teased out by some manipulative action. Sorry folks, it is just a mirage. It will always be out of reach because it does not exist.
Information is lost in both Jackson Holes and black holes.