OCR and other tools

When Susan Edmunds emailed asking about tools other than OCR for controlling inflation, I asked her whether she was suggesting I say Voldemort repeatedly while hoping for the best. 

There are a lot of bad alternatives, some best not spoken.

First Union suggested taxes on the richest. It's the opposite of where you'd want to target taxes aimed at reducing aggregate demand if you followed Keynesian-style arguments around marginal propensity to consume. Stopped clocks, eh?

I noted that monetary aggregates used to be targeted, but increasing difficulty in defining the targeted aggregates, combined with changes in the velocity of money, pointed to price/inflation targeting rather than money supply targeting. I also noted that the Bank's LVR rules a decade ago seemed most easily explained as an attempt to shave the peaks off of asset price appreciation, but that I didn't think it was a great idea. 

An old Labour idea of having Kiwisaver contributions vary over the business cycle also got play. It never made any darned sense: you require higher contributions at the top of the cycle and lower contributions at the bottom of the cycle: buy when high, and buy less when low, doesn't seem like all that great a default setting for Kiwisaver funds. 

Bad times make people reach for bad ideas, which worsen overall economic conditions...