Tuesday, February 19, 2019

Bill Dudley — Budget Deficits Still Matter

Amazing. A major player at the Fed and key voice in setting monetary policy didn't know how the monetary system works based on correct operational understanding — which MMT provides and which he also proves ignorant about. And this when he was also serving on the FOMC and deeply involved in setting monetary policy for the US, which also affects the entire world, during the crisis and aftermath.

Bloomberg Opinion
Budget Deficits Still Matter
Bill Dudley
William C. Dudley is an American economist who served as the president of Federal Reserve Bank of New York from 2009-2018 and as vice-chairman of the Federal Open Market Committee. —Wikipedia


Jeff Spross explains why monetary policy set by the Fed is less effective than fiscal policy owing to the Fed's shotgun approach versus the tight targeting of spending that MMT and other fiscalists recommend.

But he assumes for the argument that the Fed knows what it it doing. Bill Dudley's op-ed above shows that is not the case.

This undercuts the argument for preferring monetary policy to fiscal policy since fiscal policy is in the hands of politicians with interests, whereas the Fed is politically independent and operated by knowledgable people. Turns out they are not all that knowledgable after all.

1 comment:

Ryan Harris said...
This comment has been removed by the author.