Alexandra Jaffe of National Journal reports that Mitt Romney is opposed to a third round of quantitative easing. This doesn’t come as too much of a surprise, but one wonders if the former Massachusetts governor might endorse monetary expansion if he is elected president. Recently, Josh Barro speculated as to the contours of fiscal policy under a Romney administration, arguing, among other things, that Romney would be reluctant to embrace deep Medicaid cuts and that he might embrace fiscal stimulus through an ambitious effort to restructure underwater mortgages. I find the latter prospect unlikely, but I wonder if embracing a higher inflation target might be another route to the same end. As Steve Randy Waldman has observed, the “median influencer” in the U.S. is strongly opposed to inflation, which makes this a risky strategy. But it might prove preferable to the alternatives.
by Reihan Salam