For Forbes.com, here:
Beckworth and Ponnuru . . . seek money creation to achieve economic growth, or to quote them directly, “central banks would be required to try to keep nominal spending growing at a certain rate” through 5% annual money growth. They bemoan “nominal spending” that “is currently far below the pre-crisis trend”, and remarkably they believe the Fed can remedy this by virtue of gunning the money supply.
Of course missed by the writers is that all demand in any economy results from the provision of supply first (Say’s Law, as one would expect, merits no mention in their manifesto), so to boost the demand, you don’t devalue the currency as they would like to; instead you stabilize the currency so that liquid investors feel comfortable offering up capital to producers. Schumpeter understood that there are no entrepreneurs (and no production) without capital, but if the desire is to devalue the currency then investable capital is naturally going to dry up; that or migrate toward the inflation hedges of yesterday as it did in the ‘70s and since 2001.
