Really great links - Krugman - CDS on non-existing bonds - Keynes & Hayek - FT on NGDP

Paul Krugman - J'Accuse - "But the reality is that unconventional monetary policy is difficult, perceived as risky, and never pursued with the vigor of conventional monetary policy.
Consider the Fed, which under Bernanke is more adventurous than it would have been under anyone else. Even so, it has gone nowhere near engaging in enough unconventional expansion to offset the limitations created by the zero lower bound."

Edward Lucas - East European economies - "A good example of outsiders’ wrong views was the market in credit-default swaps on Estonian debt. This was a chance to trade bets on, in effect, the death of a non-existent horse, as Estonia has no publicly traded government debt."

Paul Kasriel - Keynes and Hayek - "Both J.M. Keynes, the founder of the school of economics named after him, and F.A. Hayek, an icon of the ultra-free-market Austrian school, both said that when the financial market is unable to create credit because of capital constraints and when private aggregate demand collapses, there is a role for increased government spending and central bank financing of that spending. Neither Keynes nor Hayek recommended such policies in “normal” times. In fact, Hayek argued that excessive central bank credit creation in normal times would ultimately lead to a depression. But if, what he called a “secondary depression” was imminent or upon us, it should be avoided or mitigated by an increase in government spending and central bank credit creation to help finance the government spending. <..> Neither Hayek nor Keynes believed that any good could be served by the deflation and unemployment that would accompany a secondary depression. In the early 1930s, it could reasonably be argued that the U.S. experienced a secondary depression. I believe that the U.S. was on the brink of secondary depression in late 2008."

Samuel Brittan - FT - "The alternative to inflation targets has long been known. It goes by the ungainly name of nominal gross domestic product. This is just the familiar GDP, but before adjusting for inflation. A nominal GDP objective was for long championed by the British economist James Meade, although it was implicit in many other proposals. I have often thought that its name is the main obstacle to its acceptance and have suggested paraphrasing it as a national cash objective.
The basic idea is that monetary and fiscal policy cannot “manage” demand and output in real terms, as so many postwar experiences demonstrated. What it can endeavour to do is to maintain the growth of cash spending by an amount sufficient to sustain normal growth if costs and prices remain stable. It is a fairly subtle compromise between an output and an inflation target."