Magic dust (a fable) In the mid-1990s, the consensus view was that central banks should target inflation at 2%. Then in the late 1990s, a light rain of “magic dust” descended on the islands of Japan. The dust made people passive and fatalistic, and the economists there suddenly forgot how to create inflation, a previously inconceivable development. At the […]
https://www.themoneyillusion.c....om/magic-dust-a-fabl

A long strange trip For readers who don’t already know this, my new blog is over at Substack: scottsumner.substack.com This will be my final Money Illusion post. The blog began on February 2, 2009. But the events that led to the blog took place in late 2008. Indeed my life can be divided into two segments, before and after […]
https://www.themoneyillusion.c....om/a-long-strange-tr

Are we moving toward fiscal dominance? A recent Bloomberg article suggested that we may be moving toward a regime characterized by fiscal dominance, at least part of the time: In their paper, three economists from New York University, Stanford and London Business School argue that the US is moving from a regime of “monetary dominance” to one of “fiscal dominance.” In […]
https://www.themoneyillusion.c....om/are-we-moving-tow

Yglesias on political sorting There has recently been a lot of discussion about how all of the conspiracy nuts are moving over to the GOP, whereas not so long ago they were at least as common among Democrats. Matt Yglesias has a very good post that points out how this is a problem for both sides. The TLDR is […]
https://www.themoneyillusion.c....om/yglesias-on-polit

Jeffrey Ding on China I’ve been amazed by the response to Russia’s invasion of Ukraine. The most militarily expansionist leader since Hitler and Stalin starts a war that threatens to spiral out of control. He leads a country with enough weapons to destroy most of the US population. He threatens to use nuclear weapons (and is scolded by China […]
https://www.themoneyillusion.c....om/jeffrey-ding-on-c