A revised draft of “Michelson-Morley, Fisher, and Occam” is now on my webpage (Yes, new title.)
This paper argues that the long quiet zero bound is an important experiment. The zero bound or an interest rate peg can be stable, and determinate. Longstanding contrary doctrines are simply wrong — the doctrine that interest rate pegs must be unstable, starting with Milton Friedman, or the new-Keynesian view that the zero bound will lead to sunspot volatility.
I struggle hard with the implication that raising interest rates will eventually raise inflation. I’ve posted the paper before, but if any of you are following it this is a big revision.
What happens to inflation at the zero bound, and with a huge expansion of reserves? The big surprise: Nothing. This dog did not bark.