tag:blogger.com,1999:blog-8595404115121834255.post2125794599572994743..comments2024-03-28T03:24:05.678-04:00Comments on NAKED KEYNESIANISM: More on the IMF and fiscal policy and Blanchard's rethinking of macroeconomicsMatias Vernengohttp://www.blogger.com/profile/09521604894748538215noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-8595404115121834255.post-51805825072538406232014-10-14T14:55:02.216-04:002014-10-14T14:55:02.216-04:00"Why debt ratios have to fall is an incognita..."Why debt ratios have to fall is an incognita...". Quite agree. The IMF are clueless (as Bill Mitchell keeps pointing out). <br /><br />Aiming for any specific level for the debt or deficit is mad. Strikes me the objectives should be, 1, keeping employment as high as is consistent with acceptable inflation, and 2, keeping interest on the debt near zero. In fact at that zero or near zero interest rate, the debt more or less comes to the same thing as base money. So the latter two points can be re-stated: the objective should be 1, to maintain full employment, 2 to have government borrow little or nothing, and 3, as to the size of the monetary base that will simply be a number that comes out in the wash and will be dependent on the state of private sector exuberance.<br /><br />Certainly Milton Friedman advocated that latter sort of 3 point policy in a paper in 1948. See: <br /><br />http://0055d26.netsolhost.com/friedman/pdfs/aea/AEA-AER.06.01.1948.pdfRalph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com