I genuinely can’t believe the things I’m reading.
If they said that the current slump was solely down to supply side factors then their position would be coherent. But instead the argument is that, when we are in a liquidity trap, we should just ride it out.
In terms of the literature, using higher inflation in the future to escape a liquidity trap now is accepted … at least that was my interpretation. However, policy makers in the US don’t care – just like they didn’t in Japan for a long time (and counting). Lets hope the policy failure doesn’t end up as costly in the current case.