September And October Of 2008

A Money-financed Tax Cut Is Essentially Equivalent To Milton Friedman's Famous 'helicopter Drop' Of Money.

A Collapse In U.s. Stock Prices Certainly Would Cause A Lot Of White Knuckles On Wall Street. But What Effect Would It Have On The Broader U.s. Economy? If Wall Street Crashes, Does Main Street Follow? Not Necessarily.

Inflation Is Certainly Low And Stable And, Measured In Unemployment And Labour-market Slack, The Economy Has Made A Lot Of Progress. The Pace Of Growth Is Disappointingly Slow, Mostly Because Productivity Growth Has Been Very Slow, Which Is Not Really Something Amenable To Monetary Policy. It Comes From Changes In Technology, Changes In Worker Skills And A Variety Of Other Things, But Not Monetary Policy, In Particular.

The Central Bank Needs To Be Able To Make Policy Without Short Term Political Concerns.

To Avoid Large And Unsustainable Budget Deficits, The Nation Will Ultimately Have To Choose Among Higher Taxes, Modifications To Entitlement Programs Such As Social Security And Medicare, Less Spending On Everything Else From Education To Defense, Or Some Combination Of The Above.