If NGDP growth is stable then macro as we conceive it today (which is mostly a demand-side field) will disappear, and that means market monetarism will disappear. Even worse, the residual problems (and there will be supply-side problems) will appear to be failures of market monetarism. And we won't have any useful advice to offer, other than "Money won't solve that problem, nor will demand-side fiscal stimulus".How to respond? I'm not even sure where to begin. Except to say, Market Monetarists in general are quite concerned about supply side issues, even if the primary impetus for central banks and macroeconomics until now has been demand driven. So - if not Market Monetarists for the coordination which needs to happen in the future for both supply and demand related growth...who? Keynesians are primarily concerned about the interactions between government and the economy, and other areas of economics tend to be more concerned with supply side issues. In fact, some Austrians don't even see macroeconomics as a truly legitimate area of the discipline. In other words, I don't know who else is prepared to consider supply and demand side problems in the same context - let alone see them as worth taking on together, as the most important economic issues facing us today.
Before any readers think I'm overly concerned as to Sumner's musings, believe me - I'm not going to let other Market Monetarists off the hook that easily! Perhaps it's just hard sometimes to think about what actually needs to happen for monetary policy beyond the near term, especially when the primary goal of a nominal targeting rule has yet to be established for a central bank. Some who are not strictly Market Monetarists are also grappling with monetary concerns of the present, such as Miles Kimball who has tried to envision how central banks might normalize central bank operations in a negative interest scenario. Even George Selgin had this to say in a recent post:
...free banking alone will no longer suffice to make our (or any) monetary system sound.
Something else is needed. And that something must of course consist of the base regime itself. Broadly two alternatives exist for such reform. These are: (1) the restoration of a base medium consisting of some form of specie, or perhaps of some other commodity; and (2) reform of the existing fiat regime. Both options have advantages and disadvantages. A major advantage of the second is that it is likely to be less disruptive. This advantage isn't itself decisive. But it does supply one important reason for not simply dismissing out of hand proposals for imposing strict rules upon fiat-money issuing authorities - including rules that call for targeting NGDP.Clearly there are economists as well as "concerned citizens" such as myself who are willing to put in whatever effort it takes to find solutions. Just the same, it is a bit discouraging that few in positions of political power are ready to come to the table with others outside positions of power, because that really is what it is going to take to move forward. What's more, because of those not willing to budge from previously held positions, much political goodwill and economic stability continues to be jeopardized.
Those in government positions, the Fed, and economists most connected to the status quo have the most to lose, if they in fact are not willing to consider real alternatives. Which is especially true, in that the problems of the zero bound threaten to remain with us for some time. While "homelessness" may be a convenient talking point for Paul Krugman, the fact that Market Monetarists are not politically connected should give him pause, as to the deeper implications of that fact. Something tells me there will be plenty more action on the stage, before the "last" macro act takes place.
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