Nominal Gross National Income Targeting

Some economists talk about central bankers targeting NGDP. For me, that is equivalent to saying we want to target a yield curve. So let's do that.

Going to my Universal Economic Calculator, I pick a particular economic period which I want to replicate, say Apr 11, 2005. I like that curve and inflation is about 3.5%. I also like the curve because there are about five small slope changes, a rank of 5 economy, the curve says we are busy beavers.

So central banker tells everyone I am going to make a curve like that one. So everyone looks to see what they have on schedule for the10 year, 5 year, etc investment cycle, and how different will it be with the new yield chart. Especially important is how long the Fed will take to move short term rates to that point. A lot of large institutions will have to start meeting targets or risk bankruptcy. The curve has become a management chart of sorts, and careers are on the line if targets are not met. And whatever is constraining the consumer had better be solved soon. Targeting nominal GDP means targeting some real growth if money is to stay viable.

So the Money illusion, if it exists, is like a snap-to taskmaster, the program project manager. The illusion is that we have no other projects to work on, there is only one form of monaey and its yield curve is thus.

Might work, but Congress will be the first to rebel.