Scott Sumner

There has been a great deal of recent discussion of the problem of debanking . Most of what I've read seems to miss the root causes of the problem; debanking is a symptom of deeper problems with our system of governance. The problem cannot be fixed through “regulation”, because the problem is caused by regulation.

Some bloggers take bets on the ideas they express in their writing. A few have been quite successful. I have chosen not to do so (thus far.) In some cases, those who refrain from betting are criticized for not having the courage of their convictions. I don't believe that criticism is reasonable, and I'll explain why in this post. Before doing so, let me emphasize that I am not opposed to betting, and do not criticize others for doing so. I will merely be expressing my highly subjective personal preferences. My distaste for betting has two aspects, personal and philosophical. (It's not ethical.)

A recent article in The Economist discussed what they assume is the president-elect's view of interest rates: A more hawkish Fed may, in turn, invite the wrath of Mr Trump, who has insisted that, as president, he should have a say over interest rates. He will surely want to see steeper rate cuts now that he is in ch...

Tyler Cowen recently challenged us to try to stump an AI named "o1": 1. o1 is a very good economist. Try to stump it if you can. I could not find o1, so I used ChatGPT 4o mini. I hope someone will try the following question with an o1 and report the results in the comment section: The thing I keep noticing...

Over the next year, the Federal Reserve (Fed) plans to review its approach to monetary policy. In this report, I argue that the Fed should consider adopting a policy of nominal GDP level targeting (NGDPLT). I briefly examine the logic behind such a system and address several of the reservations that monetary policymakers have expressed regarding NGDPLT.

Over the years, I've done a number of posts reacting to Paul Krugman's columns and blog posts. Now that Krugman is retiring from his NYT column (but not from academia), I thought I'd share a few observations about his career as a pundit. What made Krugman such an influential economic pundit, perhaps the most influentia...

It is possible to spend $100,000 on a luxury car. Most people don't do so, and not just because they cannot "afford" one. Even among Americans with over $100,000 in wealth, only a tiny fraction would choose to spend $100,000 on a luxury car.You can also spend $35,000 on a luxury car, something like a Toyota Camry. You ...

What is the biggest problem with the idea of the Fed subsidizing an NGDP futures market, as economist Scott Sumner has proposed? Feel free to give an answer relying on theoretical macroeconomics, agency problems, finance theory, and the like.

During the period from 2021 to 2023, inflation was far higher than the Federal Reserve would have wished, and also far higher than forecast by the markets. Does that mean we can excuse the Fed for allowing inflation to overshoot its target by a large amount? The answer is no. I'll try to explain why using an example of how things would look under both inflation targeting and price level targeting. We will assume that the Fed's inflation target is 2%.

In several recent posts, Tyler Cowen has stressed the need for better models of inflation. In one case, he expressed exasperation at my claim that (price) inflation is an almost meaningless concept: