Saturos, Yes, endogeneity is a big problem in setting interest rates. As a result, every time interest rates are set there is an ambiguity in interpreting the underlying policy. That’s an argument for some kind of nominal anchor.
Benjamin, You have been making this argument for a long time. I hope you are right, but as Saturos points out, the odds on a Romney victory seem to be lengthening daily.
Edward, No point in talking in generalities about rules-based systems unless we have a specific rule that we are evaluating.
John, I think that there are certain tendencies that move an economy toward equilibrium, but there can also be tendencies moving it away from equilibrium. This is all very complicated, and hard (for me at least) to explain in a paragraph. Maybe I’ll try writing up a post about it at some unknown future time.
On your Marx, Do you happen to have any citations?
Saturos, You meant to say Obama at 67%. He’s now over 70%
Frank, If you are talking about the ratio of federal spending to GDP, it doesn’t matter whether you are using nominal or real as long as both numerator and denominator are both real or are both nominal. Sorry, but I can’t make sense of your graph, because I don’t know what’s being measured.
As a historical question, can you cite any cases in which governments have financed their deficits by selling equity? And can you explain what kind of equity instruments were used in those cases?
