A question to those much smarter than I on the hypothesis that the masses (mob) mattered much more after 1870. No doubt it is true as revolutions show us but how much of that is perception in the same way that anthropologists know an awful lot about “cave men” simply because only those bones got preserved and archaeologists know an awful lot about kings and priests because of pyramids and churches but ancient historians just were never all that interested in the mob before it became easier to record their doings in the 1800s? Mary Beard’s SPQR is great but she acknowledges figuring out how much the masses influenced Caesar and Cicero is tough because Caesar and Cicero didn’t really write about the commoners. Tolstoy probably would have said Caesar was delusional thinking he crossed the Rubicon on his own volition.

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RE Klaus Adam When I talk with non-economists, I DO start with an explanation of why the optimal rate of inflation is not zero, but how does someone on Vox need to gently explain why zero is wrong? And if you can figure out how they came up with LESS than the conventional wisdom of 2%, please let us know.

Link back to Quiggins: I do whish that people who think that the target (explicit or implicit withing an NDGP target) should be X% or whatever, would show the (long run real income per capita maximizing?) model that gave them that conclusion. And avoiding the ZLB does not count except as pushing ST rates below zero can be show to affect the objective function.

Personally for a long time I was skeptical that the size of the real shocks we could expect made anything more than 2% [and "whatever it takes"] necessary. With the retreat of globalization I think shocks will be larger and the optimum, yes, >2%. But I'm just a lowly development economist. I want the inflation target to be the considered opinion of the thousands of macroeconomist at the FRB, not the seat of my pants.

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Re Quiggin: Appoint this man to the Fed Board but once there, the fist job will be to create a NGDP futures market. Until that is up and going, average inflation targeting and getting caught actively targeting it will have to do.

And NGDP targeting does not avoid the issue of what inflation target and full employment real growth target should be implicit in the NGDP target. "Meld them both and let God sort it out" is not optimum policy.

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Did anything really melt into air? By 1870, the old landed aristocracy had absorbed the rising manufacturing aristocracy by a combination of takeover, marriage, cultural initiation and the creation of new titles. Early in the 19th century, one was expected to "sink the shop", downplay the industrial origin on one's wealth to join the ruling class, but by late in the century this was less important as long as one bought into the aristocracy's value system. The transatlantic mixing of New World and Old World wealth shows up in countless novels and the brutal politics of the era after the Civil War and into the new century.

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Dimon's Hurricane: Possibilities

1a. ST rates may have to be raised more than the Fed says it thinks to get inflation back on target. The financial system ultimately term intermediates so this is bad for the bottom line.

1b. But the Fed does not raise them. Super-optimum inflation reduces real income; is BFBL

2. He has an intuition about greater real shocks coming which, even with optimum inflation management, will reduce real income. This, too, is BFBL

I'm always annoyed when people (unfair but Neil Irwin is arche-typical) do not specify their model of Fed behavior when spouting off about macroeconomic scenarios.

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