Keynes

Taking Down a Take-Down: the James Montier edition

After eight drafts of your book, an unsettling dread creeps up on you. Certain parts that once seemed genius now strike you as half-baked. Your writing is meandering and unstructured. You can spot the places where you resisted the urge to think deeply. You shove in quotes and calls to authority more than you should, all the while laughing obnoxiously at seasoned “experts”— never, ever forget the ironic quotation marks.

Why? Because, well, it feels pretty good to be a gangster.

James Montier, in his latest white paper, tries very hard to be a gangster. But he fails – miserably. I know because I’ve been there. In fact, I often go there. Even so, I know a huckster when I see one. And in his “exposé” on the “myth” of the natural rate, James Montier is nothing more than a charlatan.

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One-Month Money — Frequently Asked Questions

What is One-Month Money about?

One-Month Money (buy from Amazon UK, Amazon US, Harriman House) is divided into two parts. Part One — ‘The Case for Change’ — explains why our current economy is inherently unstable, and why our tools of fiscal and monetary policy can only ever hope to moderate, but never eliminate, this instability. This section ends with an explication of secular stagnation in developed economies. Driven by a structural decline in workforce growth, secular stagnation will make our current remedies, already inadequate, even more so.

To Stimulate or not to Stimulate

Keynesians like Paul Krugman and Simon Wren-Lewis have been working overtime in defence of their beliefs. The anti-Keynesian attack began before Christmas, when U.K. Chancellor of the Exchequer George Osborne wrote in the WSJ that Keynesians wanting more spending and more borrowing “were wrong in the recovery, and they are wrong now.” The attack continued when John Cochrane penned a WSJ opinion piece denouncing the efficacy of government stimulus. In it, he pointed to the fact that the US has grown despite austerity as proof that deficits are not only useless but harmful.

Nobody Knows

“Nobody really knows.” This is a phrase we should use more often, yet it’s guaranteed to send producers at CNBC running for the hills. If you want coverage, whether in the Financial Times or Bloomberg, you better pick a side. “Austerity will unleash a boom.” “Austerity will cause a depression.” Pick one of the above, but whatever you do, don’t sit on the fence.

Well, I happen to like fences. Despite the claims of Keynesian economists like Paul Krugman, the truth is that nobody really knew, in 2010, how austerity would affect Greece.