Rules like the Taylor rule fail because they use the price level as a proximate signal of whether there is too much or too little money, which is misleading; what matters for dampening the cycle is stabilizing total spending (MV = PY), not stabilizing the price level per se.

causalpending

Speaker

George Selgin

Evidence Quote

the Taylor rule look at the price level as a proximate signal of whether there's too much money or too little and it's can be very very misleading

Source

George Selgin on Free Banking 11/17/2008EconTalk
Created: 6/15/2026, 9:20:23 AM

My Notes

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