Quote of the Day: Economists and the Great Recession

| Mon Aug. 1, 2011 10:48 PM EDT

From Scott Sumner, after reading a poll showing that there are virtually no economic forecasters anywhere in the world willing to concede that monetary policy is currently too tight:

If the public of the developing world actually understood the role of economists in this crisis, we’d all be lynched. They think we failed to predict it. But since monetary policy generally reflects the establishment view of the economics profession, it would be more accurate to say we caused the Great Recession.

Sumner has an idiosyncratic view of monetary policy, but that hardly matters. Even conventional economic models suggest that monetary policy is too tight right now. But we're doing nothing about it thanks to a groundless belief among policy elites that inflation in the future is more dangerous than sky-high unemployment right now. (And in the case of Europe, more dangerous than even the possible collapse of several eurozone countries.) And so, here the rest of us sit.