John Taylor: Krugman's Claim is Absurd

John B. Taylor is the  Mary and Robert Raymond Professor of Economics at Stanford University and creator of the Taylor Rule, which is a formula by which to manage monetary policy.

Since I do not believe a central bank should be creating any money, I don't buy into the Taylor Rule, however, he is absolutely correct in his comment that Paul Krugman has distorted his position: 

I see that Paul Krugman is complaining again about an op-ed that Paul Ryan and I wrote in Decmber 2010.  I responded to Krugman back in February of this year when his complaints first appeared on his blog and in his New York Times column. But rather than deal with the economics of the response, he now again resorts to the same old claim that the article was promoting “monetary conspiracy theories.”   This is absurd.  Our op-ed said nothing about a conspiracy, it had no discussion of individuals, and it made no mention of people conspiring or even talking with each other. Our op-ed raised concerns about the ineffectiveness of quantitative easing and about the departure from rules-based policy—concerns expressed by many people then and now. Our op-ed also said that an upcoming round of “QE2 will create more economic uncertainty” and that quantitative easing operations “involved the Fed in areas of fiscal policy, such as credit allocation,” which were the proper role of Congress. Of course, we now know that QE2 was followed by QE3 about which even more questions about ineffectiveness have been raised.

 -RW