The new Keynesian recommendation for monetary policy is to “stabilize the growth of aggregate demand.” In plain language this means that the monetary authorities should never stop flooding the economy with paper money.
"History cannot teach us any general rule, principle, or law. There is no means to abstract from a historical experience a posteriori any theories or theorems concerning human conduct and policies."
Price inflation is so difficult to predict, because there are so many moving parts: money supply, demand, money velocity, and supply of goods and services.
In theory, it is possible to adjust inflation measures to account for the many constant changes in prices resulting from changing demand, quality, and innovations. But it's essentially impossible to execute these adjustments accurately.
Governments can increase GDP numbers simply by spending more, and this can reduce debt as a percentage of GDP. But what if we calculate GDP using only private spending?
Central bankers think too much saving is a problem that must be solved with more money creation. But the real problem is the Keynesian-style fractional reserve banking system.
Modern central banks have already moved far beyond what was once considered the proper role for a central bank as a "lender of last resort." Now Keynesians and MMTers want to take things even further.
