Correcting and Helping Herr Doktor
Krugman tells us that the line that "there are no libertarians in a foxhole" came from this July post by Jeff Frankel. No disrespect to Mr. Frankel, but I used a similar line back in March (by the way, I stand by that post). I'm not sure if I came up with this on my own or if I saw it elsewhere first, but I can say with certainty that Mr. Krugman is wrong.
In another post Mr. Krugman talks about the problem of negative inflation expectations. I agree that this is/would be a problem. There is a fairly simply solution to it though: have the Fed explicitly target the price of gold, say at $1000 per ounce. I'd prefer a lower number, but I also like powers of 10, and the number should be higher than where gold is now. Doing so would let market participants know that inflation is on the way, while credibly signalling that very long-run prices will be fairly stable.
In another post Mr. Krugman talks about the problem of negative inflation expectations. I agree that this is/would be a problem. There is a fairly simply solution to it though: have the Fed explicitly target the price of gold, say at $1000 per ounce. I'd prefer a lower number, but I also like powers of 10, and the number should be higher than where gold is now. Doing so would let market participants know that inflation is on the way, while credibly signalling that very long-run prices will be fairly stable.
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