He fails to understand the root causes of the recent collapse in the mortgage market, and consequently makes irrelevant suggestions that inflation is the solution to incompetence.
Instead of arguing that the Congress and the Administration failed in their tasks, he suggests that future problems be dealt with by future explosions in high-powered money, and that we just live with the coming inflation.
This is what you get when you take the advice of someone who has never sat on a trading desk, never risked his own money on his decisions, and never faced the consequences of failure.
I've listened to pompous ignoramuses like this my entire career, and have made lots of money betting against them.
* * * * * J B K * * * * *
San Francisco
IMF Survey online spoke to Olivier Blanchard, one of the authors of Rethinking Macroeconomic Policy, about the reasons for publishing the paper now and what he hopes to achieve. Blanchard, who joined the Fund in 2008 from the Massachusetts Institute of Technology, is Economic Counsellor of the IMF and head of the Research Department.
IMF Survey online: Why are you publishing this paper, which essentially attempts to lay out the contours of a new macroeconomic policy framework, now?
Blanchard: As the crisis slowly recedes, it's time for a reassessment of what we know about how to conduct macroeconomic policy. It was tempting for macroeconomists and policymakers to take much of the credit for the steady decrease in cyclical fluctuations from the early 1980s on and to conclude that we knew how to conduct macroeconomic policy. We did not resist temptation. The crisis naturally forces us to question our earlier conclusions and that's what we are trying to do in this paper.
http://www.imf.org/external/pubs/ft/survey/so/2010/INT021210A.htm
