What, Blanchard and Ubide again?

The next paragraph, after that opening:

Our contention has been that lower interest rates decrease the fiscal and the economic costs of public debt. In addition, lower interest rates and the effective lower bound on nominal interest rates limit policymakers’ ability to use monetary policy, requiring them to rely more on fiscal policy to sustain demand and activity. We have made a careful case for the use of primary deficits to sustain demand where needed, and for the use of these deficits to finance growth-friendly measures, such as the fight against global warming, or the financing of transition costs of reforms, or other types of public investment. We have argued that, by increasing investment, a well-designed fiscal policy can contribute to increased neutral rates, in turn making monetary policy more effective.

So the main thrust of their argument is that low interest rates make public debt a good deal. A secondary issue, offered "in addition" to the main thrust, is that low rates make monetary policy ineffective. Third, they have made "a careful case" that deficit spending would be a great way to expand "the fight against global warming".

To pick up where I left off yesterday, it's all bullshit.

It's certainly not economics. Economics wouldn't focus on getting you a bargain price on the fight against global warming. I think Blanchard and Ubide only bring up global warming because it has a pre-existing fan base which they hope to use to expand their readership. What else could it be? That they don't know the difference between macro-economics and bargain-hunting? Give me a break.

Where is the part where Blanchard and Ubide ponder the need "to sustain demand" and how that need arose and whether their recommended solution even works?

And how the hell did the failure of monetary policy get to be just an afterthought? What's wrong with these people?

The one sentence that impresses me:

We have argued that, by increasing investment, a well-designed fiscal policy can contribute to increased neutral rates, in turn making monetary policy more effective.

That's economics. That's where they should be all the time. But you can't just give it one sentence and think you're done. If you want to increase investment, you need to know why investment is insufficient and you might want to know the cause of the cause, and the cause of the cause of the cause.

If you work backwards like that, eventually you'll find that the ultimate cause of most any economic problem is policy. Policy that's just wrong, or policy that was right but then the economy changed. Add a little irony to that and make it that the economy changed because of policy (as it should), and you've got the Lucas critique.

Now that's funny.