The central banker's bogeyman by Ryan Avent

Then yesterday, Mr Altig (blogger at Atlanta Fed) addressed an argument made by economist Simon Wren-Lewis:

In another recent blog item (also with a pointer from Mark Thoma), Simon Wren-Lewis offers the opinion that acknowledging uncertainty about size of the output gap actually argues in favor of being "less cautious" about taking an aggressive policy course. The basic idea is familiar. It is a simple matter to raise rates should the Fed overestimate the magnitude of the output gap. But with the short-term policy rates already at zero, it is not so easy to go in the opposite direction should we underestimate the gap.

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All of recent history, in other words, suggests that Mr Wren-Lewis is exactly right: it's much easier for central banks to go in one direction than in the other. Now one could, as Mr Altig says, come up with a "plausible argument" in which things don't work like that. Given the very large and ongoing costs of labour-market weakness, I would certainly expect America's central bankers to do better than that. I would like to see some very clear evidence that a year or two of 4% inflation poses more of a threat than at least a year or two more of unemployment well above the natural rate. What we're getting instead is little more than hand-waving.

A Man Without Honor (for newbies) Onion recap

A Man Without Honor (for experts) Onion recap

Good comment sections for both.

The Human Disaster of Unemployment by Dean Baker and Kevin Hassett

Thankfully, there is some effort to learn from this model. The recent bill that extended the payroll tax cut included a provision that covered the cost of work-sharing programs in the 23 states that already had them as part of their unemployment insurance systems, and it helped other states start such programs. This should slow job destruction in those states, which will improve chances for all workers seeking employment. From now on, the first line of defense during a recession should be to expand work sharing rather than simply extend unemployment benefits.

Joe Weisenthal vs. the 24-Hour News Cycle by Binyamin Appelbaum