Scott Sumner: People seem to miss the entire point of Bernanke's thought experiment. The point is not that central banks must buy up massive quantities of assets at the zero bound. Rather that it is not necessary to buy up lots of assets, if the central bank is truly committed to inflation. If BOJ officials unanimously said, "we will do this if necessary", it would not be necessary.
Scott, we know the Fed will eventually engage in a desperate act. A lot of us were around during the Nixon shock, and we all still feel the effects of the Roosevelt shocks,
What did Nixon do? He dumped cash on holders of gold. We got 10 years of high inflation as the shock worked through. We are going to do the same thing, but we are not awaiting the Fed to scare us, we get it. We do flights every generation, with certainty.
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