The Corner

For the Birds

Ryan Cooper writes that “with the recovery finally accelerating, both the goldbugs and their conservative critics have largely fallen silent. Now Ramesh Ponnuru, previously one of the monetary doves, cites papers chiding the Federal Reserve for historically allowing too much inflation. . . . In other words, the reformocons’ one major intellectual success lies all but abandoned. . .”

I was never going to be a dove for very long. Being a hawk on monetary policy in all circumstances, or being a dove in all circumstances, makes as little sense as being either of those things on foreign policy in all circumstances. I’d say the Fed’s general tendency has been to err on the side of being too loose—that is, of letting nominal-spending growth accelerate—but that its much rarer errors on the other side have been more devastating in their effects. My preference would be for a steady rate of increase in nominal spending, say at 4.5 percent a year. If the Fed had pursued that policy over the last half-century, it would have been much tighter during the 1960s and 1970s, a bit tighter during 2003-6, and much looser in 2008-11. On average, we would have had a much lower (and a more stable) inflation rate.

The case for monetary expansion, while strong at the depths of the crisis, has steadily weakened over time. To the extent I’ve “abandoned” dovishness, then, it is because I have never been rooting for its unqualified “success.”

Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.

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