Tuesday, July 15, 2014

Sumner and Christensen Harangue Incompetent Technocrats

At EconLog, Scott Sumner is being witty. Not only did he title his post, Governments don't create problems, they solve them. He closes with this:

For you math jocks, here is a mathematical translation of the absurdity:
NGDP = C + I + G + NX
Increases in the money supply obviously cannot boost NGDP, because the real problem is excessively low consumption, investment, government spending, and net exports. Don't think top government officials would ever be so blind as to think this way? Think again.
PS. Here's the equation that they should put in principles textbooks:
M*V = C + I + G + NX
It will never happen---as it might get students thinking dangerous thoughts.
The post stems from a comment about low inflation in Europe and the inability of central bank officials to take responsibility for the effects of their policies. Lars Christensen covers the same point today. 

1 comment:

  1. I liked the comment from "A":

    "That has to be the most sarcastic use of "math jocks" in internet history."