The Money Illusion

Scott Sumner, monetary policy economist at Bentley College, has started a (Cowen AAA rated) blog. It certainly takes on some of the conventional wisdom. A sample:

Many economists simply assume that the current contraction has been caused by the financial crisis.  After all, isn’t that obvious? Actually, no.  For nearly a year after the onset of the financial crisis nominal GDP continued growing at better than a 3% clip.  Now it is plunging.  Most seem to assume that this new state of affairs was somehow caused by the Lehman failure, and the subsequent loss of confidence in the entire financial system. My view is that this reverses the causality; it seems much more plausible that the current problems in the financial system are being caused by the recent (and expected future) sharp fall in nominal GDP.