precisely because the long-term returns from US debt are at least uncertain."
so nobel guy simzzzedale sez
but
" real, coherent, coordinated fiscal and monetary policy with forward guidance could no doubt do better. "
"The current situation creates unnecessary, large amounts of uncertainty about policy."
an unintended plea for something like the " full paine mark up market "
or
C and L's MAP ?
back ground on certain and uncrtain paths:
let' start where our tacit hard money mania leads us:
"sustainability of positive real debt requires that primary surpluses are positive on average over time."
yup simple simon's fiscal space squeeze
you gotta have something left over
after all the cycles
a little less spending then taxing to pay out a real return
if the maxim of choice is ....
nominal public debt must carry
--even if de minimis---
if we insist on a " real return"
ie
the value of total uncle debt pay back
must end up
"slightly above "
the full inflation compensation line
then
we can not reliable insure full employment for ever
nothing prevents structural deficits at full employment right ?
trade gaps excessive private accumulation etc etc ...
rectification may only get p[art way
b4 new structural problems emerge
no balance between necessary deficits and possible full employment surpluses
is assured
no long term fiscal balance will emerge magically
we can couple with assured perminent full employment
we must have some finacial repression some negative returns on some uncle debt
-------------------------
how about the simpler zero loss guarantee
no negative aggregate value change on public issuesheld
by a single investing unit
over the existence of any finite investor unit ?
a zero loss in aggregate insurance policy
-------------------------------------------------------
back to derr Zimzle :
"Fiscal policy can, if described properly, remedy the problem
that announcements of commitments to future monetary policy actions
may not be credible if there is no corresponding current policy action.
Major fiscal policy interventions, accompanied by
a discussion of their implications
for inflation and for future monetary policy,
might have a better chance at being believed."
and thus effective
you bet
-------------------------------
there must always be repression:
" discussion of government debt and deficit policy
has tended to be in real terms,
with no explicit acknowledgment that the debt
will be reduced in part by inflation"
of course it will it must be to sustain public finance
but
the implicit repression policy has to be implicit
a dirty elite secret
we in the knows
all pretend to adhere to hard money goals eh ?
ie an explicit negative real return policy is verboten
inflation as a policy tool must be tacit
if the actual mass response
to product inflation must remain
a simple
" inflation....baaaahd "
----------------
general comment
despite this very astute review of NK model worlds by sims
with its outline of both the reflections and non reflections
within the NK world of aspects of the real one out there
the whole operation strikes me as way too fouled up
by the voodoo curse of its expectational pre occupations
fear of what free pricers producers and spenders
" might do"
in response to policy moves
is really fear of its own shadow
sims why not scrap laissez faire pricing ?
precisely because this stance
refuses to let the state
coherently "coordinate"
the national production system
ie
make the NPS work
as if there really was
but one agent in the system
