Thursday, April 13, 2017

My NGDP targeting idea

We do it just like Selgin, but use the bond default method. Now, this applies to all accounts. We default some loans in favor of deposits at a 2% mean. When defaults fall below the current 2% mean, default the loans of out of loan heavy accounts in favor of deposit heavy accounts.    Government, being impossibly out of balance, will default the most. Each of the separate government programs will want to get in balance and share the defaults of losers.  Once the collection of member banks moves toward similar balance, then the defaults happen on the margin and it should work just like Selgin's version.

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