I see that Paul Krugman is still insisting that Britain’s problems are due to fiscal “austerity,” which would only make sense if they were stuck in a liquidity trap and the BoE was no longer able to hit its nominal targets (whether inflation or NGDP.)

Even worse, he’s still using RGDP data even though NGDP is the appropriate way to ascertain the level of demand.  RGDP inappropriately mixes supply-side and demand-side issues. Employment in Britain is hitting record highs (unlike the US, where employment is mired far below the peak under Obama’s policies) suggesting that some of the low RGDP reflects supply-side problems.

Meanwhile, Mark Carney seems to have successfully talked the pound lower, and inflation expectations are soaring.

The U.K. 10-year break-even rate, a gauge of inflation expectations, climbed to the most since September 2008.

The rate, which measures the difference in yield between index-linked and nominal securities, rose six basis points to 3.35 percent at 12:43 p.m. London time.

For fiscal “austerity” to be a problem you’d somehow have to believe that it’s preventing the BoE from achieving even higher expected inflation rates.  How plausible does that sound?

PS.  Recall that famous example of liberal cluelessness at the New York Times?

Number in Prison Grows Despite Crime Reduction

The British newspaper The Guardian produced this gem:

Record jobs level with almost 30 million Britons in work

Unemployment down to 2.5 million by end of December but Labour says British workers paid price with wage cuts

In America employment is still more than 3 million below the pre-recession peak.  And we have a faster growing population than Britain.

PPS.  Nicolas Goetzmann sent me this FT article, which (implicitly) makes a strong case for the superiority of NGDPLT over inflation targeting, and then inexplicably ends as follows:

These considerations are highly relevant to the current discussion about the monetary policy framework that has been encouraged by Mark Carney, BoE governor-designate. To “tie the hands” of policy makers through a mechanism such as nominal GDP targeting could be unwise, as a shift in the relationship between inflation expectations and stock prices would require a change in policy.