Ramesh Ponnuru on the Conduct of Optimal Monetary Policy


I agree with : We need to keep interest rates low now to keep our economy growing.

One might wonder why we should give special credence to someone with an AB in history. It’s a sign of the times (or a commentary on Mssrs. Moore and Cain) that Mr. Ponnuru’s views are more nuanced and intelligent than those two names mooted for the Fed.

In BloombergOpinion in 2018, Ponnuru writes:

There are several reasons for concern about how the Fed will respond to the next downturn. Because it targets inflation, it may be tempted to tighten money inappropriately after a negative supply shock. In 2008, for example, higher oil prices seem to have led to a more restrictive Fed policy than warranted.

Strangely, Ponnuru does not suggest the things that make sense in light of very real concerns, like the zero lower bound. Moreover, he discusses the issue as if Fed (Committee, Board, System staffs) had not considered the possibility of supply shocks. It’s as if he doesn’t understand a Taylor rule characterizes in part the setting of the Fed funds rate. (And by that standard, the Fed funds rate is currently not altogether that high).

What about setting the target rate at 4% (Blanchard), price level targeting instead of inflation targeting, nominal GDP targeting…? Advocating for a lower interest rate without a formal analytical framework — that way leads (not to madness but) to ad hoc-ery susceptible to political pressure.


14 thoughts on “Ramesh Ponnuru on the Conduct of Optimal Monetary Policy

  1. Not Trampis

    Seems like a rationalisation for changing your mind despite the circumstances not being different to ccccccccchange what Keynes said.

  2. Moses Herzog

    Based on the fact I only took undergraduate economics classes, and am not superb at math, people can take this for whatever it’s worth, But I’d take Blanchard’s way over Taylor’s way any day of the week. I’m guessing if I was President [ insert moment for fall to the floor in laughter here ] this is something Menzie and I would haggle over, as I’m guessing Menzie would push for Taylor’s way, with me giving Menzie final say after I felt we had argued the issue long enough (not talking if Menzie was on the FOMC board but if Menzie was on my NEC).

    My first thought on the Ponnuru deal is, is that Tweet a sincere contribution to the dialogue or is Ponnuru job auditioning for the MAGA team?? Does Ponnuru really want to go the Omarosa route?? How many monthly checks for doing nothing and how many book sales are worth selling out your own race and selling out your own soul?? I suggest Ponnuru make an “off the record” phone call to Omarosa and ask her how many black Americans respect her now and if that is worth the loss of personal dignity. [ I can foresee one of our village idiots on this blog “informing” me that “Ponnuru is Asian Indian, not black”. Yes I know that, but the parallels are nearly the same. ]

    In 2019—the way this country is going—maybe Omarosa does think it’s worth it. After all, why would she sprout a conscience now??

  3. randomworker

    I think this is what they call “pulling out all the stops.”

    What could possibly go wrong?

  4. Moses Herzog

    Does Ponnuru have any thoughts on this?? Or does that present problems for him in the kiss trump’s a$$ department??


    What ARE Ponnuru’s thoughts?? His argument appears to be a convoluted way of saying “It’s all the dirty liberals’ fault donald trump is a blatant racist”:

    That’s a very imaginative political stance for a man who was born and raised in suburbia Kansas City in a town the 2010 census said was composed of over 95% whites. It’s no wonder the AEI and National Review like to cart him around and have him wag his tail around like a good house pet. Good mascots are hard to come by. But donald trump probably likes pets that are willing to eat their own vomit. By a wild coincidence it’s also the main characteristic now needed for appointment to the Federal Reserve Board.

  5. pgl

    Ponnuru has a long history of writing really stupid opeds at the direction of his political masters.

  6. Not Trampis

    I liked the way Glenn Rudebusch applied yonks ago. He appeared to understand it much better than Taylor!

  7. Moses Herzog

    I think I said before I thought this guy was a survivor and at least had the ability to outlast the donald trump pandemonium if that is in fact what he wanted to do. I had actually suspected somewhat in the early stage of this that he might want to exit. But one could argue his enthusiastic signing on to the Comey obstruction of justice firing showed his true colors. I’m sure my old comments on Rosenstein are somewhere in Menzie’s archive, but I am just too lazy to hunt them down.

    Rosenstein is a sharp one, and there’s no debating that, like him or hate him. What I strongly suspect at this point is, he knows no Democrat administration would touch him after getting trump’s slime all over his suit and shoes, and he “cast his lot” with donald trump. So he might as well make his bed sheets as smooth as he can, now that he is stuck in them.

  8. Moses Herzog

    Wanted to highlight this. I have discussed how this lady is one of the best journalists we have in America. Her team was one of the ones uncovering some of the biggest scandals and crimes related to immigrant children being put in ICE cages and other abuses of the new MAGA policies (when she worked as an editor at “Reveal”). Recently she was inducted into the Oklahoma Journalism Hall of Fame, and very deservedly so. Oklahoma is not really a “bastion” of great journalism, but Ziva Branstetter is very conceivably the best journalist the state has EVER produced.


    She now works at the Washington Post. When she worked at Tulsa World and non-profit “The Frontier” she covered many stories similar to this recent one (this linked story is not written by her, but a continuation of a story done by her “Frontier” team) about a policewoman who shot an unarmed black man standing on the outside of his own car. That policewoman, Betty Shelby, who shot an unarmed black man is now “teaching” gun safety classes for the NRA.

    Ziva Branstetter is a 100% class human being and also a stellar journalist. The state of Oklahoma misses her.

    If you’d like to support her old non-profit journalism team in Oklahoma, even just $10 they would be happy to get it and would help uncover more things, like the abuses by donald trump’s ICE agency. I should tell those pondering to donate to some great journalism, that is is mostly regional area news, not national. Though some stories may have national impact. I have no affiliation with them other than being a regular reader.

  9. Neil

    Frankly, if I had to choose between Ponnuru and Moore I would prefer him and his AB in History over Moore and his MA in Econ from George Mason.

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