Market monetarians:. Scenario

"The Fed could do this by committing to buy up as many securities as needed to hit its target. .....................Unlike previous large-scale asset purchases by the Fed, this would be a conditional purchase tied to an explicit target................. ....... It therefore would be more effective in guiding market expectations and, in turn, less costly for the Fed. If Fed chairman Ben Bernanke announced that the Fed was going to act to bring nominal spending back to the pre-crisis trend, it would send shock waves through the markets. Portfolios would automatically adjust toward riskier assets in anticipation of the Fed action. ............ This would create expectations of higher asset prices, as would expectations of higher nominal-income growth......... As a result, the demand for money would fall and financial firms would start making more money assets.............. Current nominal spending would quickly respond to these developments, helping the Fed hit the target and thus reducing the need for the Fed to purchase more assets......... The Fed’s balance sheet, therefore, would not have to expand as rapidly as it has over the past few years......" ................. ............. The links here strike me as "venturesome" ...eh ??........................ If we choose 5 % as the trend level increase of ngdp We have this range: at one zero pole 5% inflation and at the other zero pole 5% output growth This becomes a sturdy inflation /deflation anchor if real output growth over long periods is fairly stable And predictable Inflation level targeting or output level targeting alone are both rejected " central banks adopted an explicit rule for the growth of nominal income, with the proviso that they would correct for short-term departures from the target, they could pocket the gains we have made in monetary practice while fixing some serious remaining flaws. The difficulty of using interest rates as an instrument at the zero bound, the inability to restabilize long-term expectations after a deviation, and the inappropriate responses to supply shocks would all cease to be problems. The Fed’s dual mandate would be obeyed, but its flexibility would be constrained by a rule and thus its behavior made predictable."