October 8, 2018

The Moment of Maximum Danger

Scott Sumner

Ralph G. Hawtrey Chair of Monetary Policy

Some people are confused when I argue that excessive monetary ease right now could make a recession more likely. Aren't recessions caused by tight money? Yes, but they are also caused by mistakes that lead the Fed to want to sharply slow NGDP growth. And that sort of mistake is more likely to occur when policy has previously been too expansionary...