Since 2008, Rogoff has recommended that the Federal Reserve commit to an extended period in which it will seek to set inflation at 4 percent. That would effectively make debt worth less. That’s anathema to central banks, which have spent the past few decades building their credibility as inflation fighters. But Rogoff is unimpressed. “All the central banks of the world have been fighting the last war,” he says. “This is a once-every-75-years great contraction where you spend your credibility. This is what that credibility is for.”Update (8/12): Rogoff explains his thinking more in this FT column.
Sunday, August 7, 2011
Time to Cash in the Fed's "Credibility"?
Ezra Klein talks to Ken Rogoff:
Labels: monetary policy