Hi Nick,

While I do not disagree with some of the sentiment I’m not sure I see things quite the same way. The lender of last resort function is necessary for either NGDP targeting or flexible inflation targeting – and the reliance on a sophisticated large central bank remains in both cases.

Where I do agree with you is that NGDP targeting provides MORE of a fixed and enforcable rule than flexible inflation targeting (which provides discretion), of course we could get the same thing through NGDP growth targeting – in which case we are discussing growth vs level targeting again.

There are a number of points of difference in these seperate rule based policies that must be discussed for sure – the key thing for me though is that all these rule based policies are far superior than not have these set rules, because of the way they help to set expectations.

I would like to point out that with a NGDPLT future target
is much better then flexible inflation targeting, maybe not much
theoreticly but practicly its a huge diffrence.

With NGDPLT futures al la Scott Sumners the central bank is basiclly reduced to nothing. I dont know about all MM but many would probebly stop the fed from beeing lender of last resort. Even if you assume internal forcasts of NGDP, the role of the fed would still be quite small.

A flexible inflation target is a hole diffrent beast, you still ned a huge
amount of experts to pull this of, also expectations would not be as
clear since when something is a ‘liquidity trap’.

Als you probebly do not want to put so much power in to the hand of central bankers, one should always keep the political economy in mind.

Or they could attempt actual inflation targeting – with room for discretion in the face of a liquidity trap, a recognition of the lender of last resort function, and appropriate insurance charges given the moral hazard problems that appear from having a lender of last resort.