Thread by @GeorgeSelgin

I heartily agree with @alexwsalter and @smithdanj1's claim that having the Fed "stabilize total dollar spending...is the best we can do when it comes to fighting recessions."

On the other hand,...

https://twitter.com/alexwsalter/status/1375227339320229893

I'm taken aback by their claim that "We now know the Fed has a great deal of control over the price level, but much less over employment" and that it only "uses the 'full employment' part of its mandate to justify irresponsible behavior."

Surely, if "we" have learned anything this past decade, it's (1) that far from proving itself very capable of controlling the price level, the Fed has not even been able to achieve its inflation rate target and (2) that it has also tended to underestimate "full employment."

It's the last fact, primarily, that has informed the Fed's new-found emphasis upon the full employment component of its mandate. So while the Fed may be guilty of some "irresponsible behavior," it hardly follows that it has legitimate reason for emphasizing "full employment."

Indeed, I and most other proponents of NGDP level targeting favor it over inflation targeting in large part because we consider it more capable that any sort of inflation targeting of fulfilling the full-employment component of the Fed's dual mandate.

Att'n: @DavidBeckworth @MaMoMVPY @norbertjmichel @dandolfa @sam_a_bell @PeterBoettke @MacRoweNick @WilliamJLuther @lawrencehwhite1 @RebelEconProf @TimDuy @sghorwitz @ken_duda @david_glasner @greg_ip

Please read: "that it has *no* legitimate reasons"