{"id":6036,"date":"2012-11-06T14:53:27","date_gmt":"2012-11-06T19:53:27","guid":{"rendered":"http:\/\/goldstocksforex.com\/?p=6036"},"modified":"2012-11-06T14:53:27","modified_gmt":"2012-11-06T19:53:27","slug":"is-the-fed-finally-listening-to-scott-sumner","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2012\/11\/06\/is-the-fed-finally-listening-to-scott-sumner\/","title":{"rendered":"Is the Fed finally listening to Scott Sumner?"},"content":{"rendered":"<p>Brendan Greely writes of Scott Sumner.<\/p>\n<blockquote><p>Sumner who holds a Ph.D. from the University of Chicago, made a suggestion in the late 1980s to the New York Federal Reserve. He proposed that the Fed set a target for nominal GDP\u2014real growth in GDP plus the rate of inflation. He felt that this would induce the correct level of business investment better than targeting either inflation or growth in real GDP by themselves. The response at the New York Fed, says Sumner, was, \u201cThanks, but no thanks.\u201d<\/p><\/blockquote>\n<p>Targeting nominal GDP (NGDP) growth eliminates reliance on <a title=\"Targeting Inflation\" href=\"http:\/\/goldstocksforex.com\/2012\/10\/31\/should-the-fed-be-targeting-inflation\/\" target=\"_blank\">inexact measures of inflation<\/a> which can mis-direct monetary policy. The advantage is that NGDP can be accurately measured. NGDP targeting would help to eliminate bubbles in the long term by restricting debt growth. And in the short-term would encourage the Fed to expand money supply in response to private sector deleveraging, avoiding deflationary pressure.<\/p>\n<blockquote><p>The announcement by the Fed\u2019s rate-setting committee in mid-September doesn\u2019t contain any mention of targeting nominal GDP. But its open-ended nature and clear goals\u2014pump up the money supply until hiring rises strongly\u2014resembles Sumner\u2019s nominal GDP model, which would have a central bank do all in its power to achieve an agreed-upon nominal rate of growth.<\/p><\/blockquote>\n<p>It has taken Sumner almost 3 decades, but in the end he is likely to get there.<\/p>\n<p>via <a href=\"http:\/\/www.businessweek.com\/articles\/2012-11-01\/the-blog-that-got-bernanke-to-go-big\">The Blog That Got Bernanke to Go Big &#8211; Businessweek<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Brendan Greely writes of Scott Sumner. Sumner who holds a Ph.D. from the University of Chicago, made a suggestion in the late 1980s to the New York Federal Reserve. He proposed that the Fed set a target for nominal GDP\u2014real growth in GDP plus the rate of inflation. He felt that this would induce the &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/thepatientinvestor.com\/index.php\/2012\/11\/06\/is-the-fed-finally-listening-to-scott-sumner\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Is the Fed finally listening to Scott Sumner?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[31],"tags":[2339,2346,2470,2486,3054],"class_list":["post-6036","post","type-post","status-publish","format-standard","hentry","category-the-fed-banks-interest-rates","tag-monetarist","tag-monetary-policy","tag-ngdp-targeting","tag-nominal-gdp-growth","tag-scott-sumner"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Is the Fed finally listening to Scott Sumner? - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is the Fed finally listening to Scott Sumner? - the patient investor\" \/>\n<meta property=\"og:description\" content=\"Brendan Greely writes of Scott Sumner. Sumner who holds a Ph.D. from the University of Chicago, made a suggestion in the late 1980s to the New York Federal Reserve. He proposed that the Fed set a target for nominal GDP\u2014real growth in GDP plus the rate of inflation. He felt that this would induce the &hellip; Continue reading &quot;Is the Fed finally listening to Scott Sumner?&quot;\" \/>\n<meta property=\"og:url\" content=\"https:\/\/thepatientinvestor.com\/index.php\/2012\/11\/06\/is-the-fed-finally-listening-to-scott-sumner\/\" \/>\n<meta property=\"og:site_name\" content=\"the patient investor\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/profile.php?id=61572934660810\" \/>\n<meta property=\"article:author\" content=\"https:\/\/facebook.com\/people\/The-Patient-Investor\/61572934660810\/\" \/>\n<meta property=\"article:published_time\" content=\"2012-11-06T19:53:27+00:00\" \/>\n<meta name=\"author\" content=\"Colin Twiggs\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Colin Twiggs\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/11\\\/06\\\/is-the-fed-finally-listening-to-scott-sumner\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/11\\\/06\\\/is-the-fed-finally-listening-to-scott-sumner\\\/\"},\"author\":{\"name\":\"Colin Twiggs\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#\\\/schema\\\/person\\\/d42b18d516a80149d739845749ac6454\"},\"headline\":\"Is the Fed finally listening to Scott Sumner?\",\"datePublished\":\"2012-11-06T19:53:27+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/11\\\/06\\\/is-the-fed-finally-listening-to-scott-sumner\\\/\"},\"wordCount\":245,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#organization\"},\"keywords\":[\"monetarist\",\"Monetary Policy\",\"NGDP targeting\",\"nominal GDP growth\",\"Scott Sumner\"],\"articleSection\":[\"Banks &amp; Interest Rates\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/11\\\/06\\\/is-the-fed-finally-listening-to-scott-sumner\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/11\\\/06\\\/is-the-fed-finally-listening-to-scott-sumner\\\/\",\"url\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/11\\\/06\\\/is-the-fed-finally-listening-to-scott-sumner\\\/\",\"name\":\"Is the Fed finally listening to Scott Sumner? - the patient investor\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#website\"},\"datePublished\":\"2012-11-06T19:53:27+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/11\\\/06\\\/is-the-fed-finally-listening-to-scott-sumner\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/11\\\/06\\\/is-the-fed-finally-listening-to-scott-sumner\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/2012\\\/11\\\/06\\\/is-the-fed-finally-listening-to-scott-sumner\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/thepatientinvestor.com\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Is the Fed finally listening to Scott Sumner?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/thepatientinvestor.com\\\/#website\",\"url\":\"https:\\\/\\\/thepatientinvestor.com\\\/\",\"name\":\"The Patient Investor\",\"description\":\"Smart. 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He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters. Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis. Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008\\\/2009 and 2020 bear markets well ahead of actual events. He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.\",\"sameAs\":[\"https:\\\/\\\/facebook.com\\\/people\\\/The-Patient-Investor\\\/61572934660810\\\/\",\"https:\\\/\\\/www.instagram.com\\\/colin_thepatientinvestor\",\"https:\\\/\\\/au.linkedin.com\\\/in\\\/colintwiggs\"],\"url\":\"https:\\\/\\\/thepatientinvestor.com\\\/index.php\\\/author\\\/investor\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Is the Fed finally listening to Scott Sumner? - the patient investor","robots":{"index":"noindex","follow":"follow"},"og_locale":"en_US","og_type":"article","og_title":"Is the Fed finally listening to Scott Sumner? - the patient investor","og_description":"Brendan Greely writes of Scott Sumner. Sumner who holds a Ph.D. from the University of Chicago, made a suggestion in the late 1980s to the New York Federal Reserve. 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He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.","sameAs":["https:\/\/facebook.com\/people\/The-Patient-Investor\/61572934660810\/","https:\/\/www.instagram.com\/colin_thepatientinvestor","https:\/\/au.linkedin.com\/in\/colintwiggs"],"url":"https:\/\/thepatientinvestor.com\/index.php\/author\/investor\/"}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9tQ4n-1zm","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":5952,"url":"https:\/\/thepatientinvestor.com\/index.php\/2012\/10\/31\/should-the-fed-be-targeting-inflation\/","url_meta":{"origin":6036,"position":0},"title":"Why the Fed should not target inflation","author":"Colin Twiggs","date":"October 31, 2012","format":false,"excerpt":"Scott Sumner, Professor of Economics at Bentley University, proposes that the Fed target nominal growth in GDP (\"NGDP\") rather than inflation as Ben Bernanke has long advocated: \"Even he [Bernanke] must be surprised and disappointed with how poorly [inflation targeting] worked during the recent crisis.\" The primary problem, Sumner points\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":12366,"url":"https:\/\/thepatientinvestor.com\/index.php\/2015\/09\/25\/japan-abandons-fed-style-inflation-targeting-and-targets-gdp-growth-instead\/","url_meta":{"origin":6036,"position":1},"title":"Japan abandons Fed-style inflation targeting and targets GDP growth instead","author":"ColinTwiggs","date":"September 25, 2015","format":false,"excerpt":"Scott Sumner quotes Marcus Nunes: Japanese Prime Minister Shinzo Abe vowed on Thursday to raise gross domestic product by nearly a quarter to 600 trillion Japanese yen ($5 trillion), pledging to refocus on the economy after the passage of controversial security bills that eroded his popularity. Abe unveiled the plan\u2026","rel":"","context":"In &quot;Stock Markets&quot;","block_context":{"text":"Stock Markets","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/stock-markets\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7732,"url":"https:\/\/thepatientinvestor.com\/index.php\/2013\/05\/12\/the-monetary-policy-revolution\/","url_meta":{"origin":6036,"position":2},"title":"The monetary policy revolution","author":"ColinTwiggs","date":"May 12, 2013","format":false,"excerpt":"James Alexander, head of Equity Research at UK-based M&G Equities, sums up the evolution of central bank thinking. He describes the traditional problem of inadequate response by central banks to market shocks like the collapse of Lehman Brothers: Although wages hold steady when nominal income falls, unemployment tends to rise\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7004,"url":"https:\/\/thepatientinvestor.com\/index.php\/2013\/03\/16\/ngdp-level-targeting-the-true-free-market-alternative-we-try-again-the-market-monetarist\/","url_meta":{"origin":6036,"position":3},"title":"NGDP level targeting \u2013 the true Free Market alternative (we try again) &#124; The Market Monetarist","author":"Colin Twiggs","date":"March 16, 2013","format":false,"excerpt":"Scott Sumner suggests that NGDP targeting is a far more conservative approach than the current inflation targeting practiced by the Fed and many other central banks: Most of the blogging Market Monetarists have their roots in a strong free market tradition and nearly all of us would probably describe ourselves\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":13626,"url":"https:\/\/thepatientinvestor.com\/index.php\/2016\/07\/29\/why-the-fed-should-use-ngdp-targeting\/","url_meta":{"origin":6036,"position":4},"title":"Why the Fed should use NGDP targeting","author":"ColinTwiggs","date":"July 29, 2016","format":false,"excerpt":"Good point made by R.A. in The Economist as to why the Fed should target nominal GDP rather than inflation: One of the strongest points in favour of NGDP targeting, in my view, is that it implied a need for far more action from the Fed far earlier in this\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/thepatientinvestor.com\/wp-content\/uploads\/2016\/07\/2016-07-29-ffr.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/thepatientinvestor.com\/wp-content\/uploads\/2016\/07\/2016-07-29-ffr.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/thepatientinvestor.com\/wp-content\/uploads\/2016\/07\/2016-07-29-ffr.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/thepatientinvestor.com\/wp-content\/uploads\/2016\/07\/2016-07-29-ffr.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/thepatientinvestor.com\/wp-content\/uploads\/2016\/07\/2016-07-29-ffr.png?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":14117,"url":"https:\/\/thepatientinvestor.com\/index.php\/2016\/09\/13\/credit-bubbles-and-gdp-targeting\/","url_meta":{"origin":6036,"position":5},"title":"Credit bubbles and GDP targeting","author":"ColinTwiggs","date":"September 13, 2016","format":false,"excerpt":"In 2010 Scott Sumner first proposed that the Fed use GDP targeting rather than targeting inflation, which is prone to measurement error. Since then support for this approach has grown, with Lars Christensen, an economist with the Danish central bank, coining the term Market Monetarism. Sumner holds that inflation is\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/6036","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=6036"}],"version-history":[{"count":0,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/6036\/revisions"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=6036"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=6036"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=6036"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}