The edited text of Prof. Scott Sumner’s 2014 Adam Smith Lecture, “The Real Problem Was Nominal” explaining how central banks caused the great recession, has been published as a new ASI report this morning.
Prof. Scott Sumner, who inspired the US programme of QE3 and was dubbed ‘the blogger who saved the US economy’ by The Atlantic, explains how central banks—not bankers—caused the 2007-8 crash. He goes on further, showing how the European Central Bank is repeating the mistakes the Fed and the Bank of England made in the dark days. And he argues that they can solve the slump and prevent future crises with a market-based, rule-based, stability-focused monetary policy of targeting the level of nominal GDP.
Here is a link to the full pdf.