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Mar. 22nd, 2009 09:51 amhttp://blogsandwikis.bentley.edu/themoneyillusion/?p=695
virtually every cutting edge macro text says that monetary policy determines NGDP growth. And yet the moment a crisis hits we get a sort of mass amnesia, and reputable economists are suddenly assuming that the rapidly falling NGDP is not a failure of central banks, but rather of commercial banks. As if it is suddenly the job of commercial bankers to manage monetary policy!
virtually every cutting edge macro text says that monetary policy determines NGDP growth. And yet the moment a crisis hits we get a sort of mass amnesia, and reputable economists are suddenly assuming that the rapidly falling NGDP is not a failure of central banks, but rather of commercial banks. As if it is suddenly the job of commercial bankers to manage monetary policy!
This is a good time to trot out my favorite philosopher, Richard Rorty. In a recent book he quoted an old pragmatist maxim; “that which has no practical implications, has no philosophical implications.” I would re-word that slightly for the current discussion:
Thus Rorty suggested that it was pointless to argue about whether something is an objective fact or a justified belief, as we have no access to an extra-human perspective, and thus can never resolve the debate.That which as no practical implications; has no implications for economic theory.
