Report by David Beckworth on NGPDLT

If you’re reading this, you know that NGDPLT stands for Nominal GDP Level Targeting, and that I believe it should be the foundation of Fed policy and the way to automate monetary policy. That goes for the UK as well (Europe has other structural problems they need to address before fixing their monetary policy). If you need to catch up, read my short description of NGDPLT monetary policy and a keynote address.

Now, David Beckworth of the Mercatus Center has published an important report that I hope you will read from start to finish:

Facts, Fears, and Functionality of NGDP Level Targeting: A Guide to a Popular Framework for Monetary Policy

Scott Sumner on Tyler Cowen on CBDC

I read Tyler Cowen’s Bloomberg blog post giving his thoughts about central-bank digital money for consumers. Tyler is smarter than I am and certainly one of the world’s leading economists, yet I couldn’t help but shake my head as I read, thinking “No, I don’t think that’s right.” In particular, I thought consumers could handle keeping their money with the Fed, especially if the Fed didn’t pay interest, and then the banks (and, I hope, nonbanks) would compete for loans in the market. That seems sensible to me. My other point is that I think there will be huge demand for CBDC, which will streamline the banking system enormously and remove the fees charged by all the middlemen (something Mark Carney is very excited about). I was about to write up my thoughts when Scott Sumner saved me the trouble. Please read Scott’s post:

Scott Sumner on Tyler Cowen on CBDC

Note his final words:

Whatever we do, I’m certain that it will be the wrong thing. Banks have way too much political power and any new regime will undoubtedly cater to their interests.
— Scott Sumner



Breaking News: Paypal Withdraws from Libra Association

No good deed goes unpunished, I guess. The pressure mounts on the Libra Association to back down from good ideas and trying to help people in emerging economies. Who wants fewer intermediaries, anyway? Why don’t we keep the same dysfunctional system all the way through the 21st century and not make any progress at all? I’ll be addressing these issues in my upcoming talk in London at the CC Forum.

Meanwhile, the politics and game-playing continues.

Paypal Leaves the Libra Association

ECB says Libra is Untested

“Stablecoins are largely untested, especially on the scale required to run a global payment system,” said the European Central Bank executive board member Benoit Coeur. That may be true, but David Siegel says the European Central Bank has been tested and has been found guilty of creating a pan-European recession in 2008 and 2009. The ECB actually raised interest rates in the face of plummeting aggregate demand, leading to job losses for tens of millions of people. How’s that track record? Not only that, but Libra promises to build its house on top of that foundation! Get your house in order, ECB, BoE, and US Fed, and maybe we can build some solutions that actually help people rather than hurt them. - David Siegel

New Head of China’s Digital Currency Says It Beats Facebook Libra on Tech Features

The Chinese central bank has a new digital currency chief who says its upcoming digital yuan has features not offered by Facebook Libra. “Its functional attributes are exactly the same as paper money, but it is just a digital form,” Mu said. Perhaps most notably, he set out some of the digital currency’s technical aspects, and compared it with Facebook’s Libra.

Read About China’s Libra Alternative