“There seems to be a view that monetary policy is the solution to most, if not all, economic ills. Not only is this not true, it is a dangerous misconception and runs the risk of setting up expectations that monetary policy can achieve objectives it cannot attain . . . to ensure the credibility of monetary policy, we should never ask monetary policy to do more than it can do.”
Pages
Blogroll
- Asymmetrical Information
- Back-of-the-Envelope Economics
- Becker-Posner
- Big Picture
- Bill Woolsey: Monetary Freedom
- Blogging Heads
- Brooks Wilson
- Café Hayek
- Club For Growth
- Coordination Problem
- DataPoints
- Division of Labor
- Don Luskin
- Econbrowser
- EconLog
- Economic Indicators
- Economic Investigations
- Economic Statistics
- Economist’s View
- Econospeak
- Eidelblog
- Freakonomics
- Greg Mankiw
- Hayek Scholars’ Page
- Instapundit
- Jimmy P.
- John Taylor: Economics One
- Kudlow’s Money Politic$
- Macro and Other Market Musings
- macroblog
- Marginal Revolution
- New Economist
- Nuccio
- Political Calculations
- Sabernomics
- Schilling — MV=PQ
- Scott Sumner: The Money Illusion
- Subprime Crisis Forum
- Supply and Demand (in that order)
- TCS Daily
- The Ambrosini Critique
- The Irish Economy
- The Sports Economist
- Think Markets
- Three Sources
- Wall Street Journal
Other writing
- A New Holiday: Division of Labor Day
- Another Supply-Side Revolution is Needed
- Are Workers Really Being Left Behind?
- Big Dance, Billions Lost?
- Dr. Detroit
- Empty Rhetoric
- Health to Pay
- How Economists Lost Hayek, and Then Found Him
- Is Inequality a Useful Measure of Prosperity?
- Microeconomic Microcosm
- Organs Anyone?
- Snow Job
- The Elusive Xbox Price-Point
Archives
- May 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- June 2006
- May 2006
- April 2006
- March 2006
- February 2006
- January 2006
- December 2005
It appears “Monetary policy’s role in the economy?” misrepresents Plosser a bit. What he apparently said was that monetary policy has limited power to *fix* things. He didn’t say it always has unlimited power. And he would be correct to say so.
Unfortunately, as we’ve seen in the 1920s, the 1970s, the first part of this decade, and then now, monetary policy has incredible power…to wreck an economy. Yet so many people ignore what central banks have done in the first place, and call upon the same central bankers to “fix things.”
The disappointing thing about Plosser is that he thinks a central bank can determine what “price stability” is, let alone “maximum unemployment.”