Monetary Stimulus Is a Moral Obligation

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Here Tyler Cowen makes a strangely bland and bloodless call for more monetary stimulus:

It’s not very glorious or motivational, but here goes: the costs of inflation, within reasonable ranges, are not very high.

He goes on to say he is skeptical of all the purported benefits of more monetary stimulus, but is willing to try it anyway because the downside risk is relatively low. True enough. The reasoning is airtight, but completely ignores the enormous, hulking fact that hundreds of millions of people are sufferingly horribly accross the world for lack of adequate demand, and better monetary policy could potentially ameliorate that.

Kudos to Cowen for coming to the correct conclusion. But he is so breezy, and so ignores the other side of the “social cost” ledger, he ends up sounding like a gargoyle:

Still, at the end of the day if we try further monetary expansion and it fails to stimulate employment, I don’t see a huge social cost to having a three or four percent rather than a two percent inflation rate.

Yeah, we could, you know, like, try and save millions of lives from ruin and penury, I guess. Or whatever. As Matt Yglesias says:

Whether or not that was a good idea, the impact of central bank independence is to put an awesome level of power and responsibilites onto the shoulder of the Federal Reserve Chairman. The moral stakes are high. Nobody forced Bernanke to take the job. Sharp business cycle downturns lead to, among other things, large spikes in suicide rates. Let’s explain to those families about the difficulties central banks face in making credible commitments.

Or, what Atrios said.

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Ryan Cooper

Ryan Cooper is Washington correspondent for The Week.