Seriously, lets all go and read Scott Sumner. He discusses how monetary policy can still be effective even when the cash rate hits zero, and I find it difficult to fault his reasoning.
I would suggest reading all the posts, but there are a few that touched me:
This one: I agree that some people think we are going to have hyper-inflation or deflation simulatenously – usually without even realising why we target inflation 😛
A short course on monetary theory: Useful historical breakdown.
Calling out the Fed: Key quote for me is
Under Hall’s proposal, the Fed would now be paying a negative rate (i.e. charging a penalty rate) on excess reserves
This was the first time I had ever seen the idea of penalty payments on reserves – and to be honest I love it. I realise that the authors first choice is having a central bank commited directly to a nominal GDP target – but I see penalty interest as something we can introduce more immediately in the current environment.
Finally, my favourite post (which is more methodology really) is this. It illustrates a major issue in the discipline – namely the vagueness of the implicit models economists sometimes use when discussing policy. It reminds me of the “rhetoric” argument of McCloskey – a good critique of the way economics IS DONE (which is different to the argument around how economics SHOULD BE DONE mind you, when it comes to this issue I don’t agree with McCloskey).