Friday, October 3, 2014

Great News from Scott Sumner

It looks like he might get an NGDP futures market going.  This is great news.  I agree with him that the Fed should already be managing something like this, even if they aren't targeting NGDP, simply as a forecasting tool.  Not only is the Fed not doing this, but it is illegal for Americans to take part.  (Yes, that is insane.  Paul Rhode - via Robin Hanson - explains, in a way, why the Fed isn't doing it and why you can't do it, here.)

We should all wish him the best.  It sounds like it is going well so far.

Here is more from Sumner on the sorry state of US financial repression.


  1. It's a great idea and I love the paradox at the center of it: the futures could only survive if policy makers don't take them seriously. Why? Because futures markets develop liquidity only if they are volatile, otherwise they're not worth trading. If expected NGDP became stable, the futures would die because there would be nothing to trade.

    1. I don't think that's a problem. There are plenty of markets based on stationary hedging relationships. In any case, if ngdp was so stable that there was no arb market, then the policy would be a success.