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Ken Rogoff Decides This Time Is Different

Rogoff was previously chief economist at the International Monetary Fund and now teaches at Harvard. He is a Republican.

Democrats criticized his 1985 paper recommending that the Fed keep inflation low and not try to influence employment.

They also didn’t like it when he told Harvard Magazine, after the Crash of 2008: “We borrowed too much, we screwed up, so we’re going to fix it by borrowing more.”

They really didn’t like it when he published This Time Is Different, a book which seemed to argue that too much government deficit spending can be dangerous for an economy.

But Keynesian cheerleaders for our present (Bush and Obama) economic policies of print (money), borrow, and spend didn’t really have to worry about Rogoff. Not too long ago, he announced that what the Fed really needed to do was print so much money that consumer price inflation would rise sharply, while continuing to cap interest rates. That would create negative real interest rates, which would be equivalent to paying people to borrow. At the time, Rogoff seemed to be talking about creating as much as 6% consumer price inflation while keeping short term interest rates near zero. In this article, he tempers this to 4%.

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