I will let the accomplished Student puzzle through the Taylor Rule for himself, quietly taking the position that my beliefs would outrage the Economists no end. The real thorn I would plant in their Shoe consists of demanding for a Rule to tighten Monetary policy, the opposite of loosening Monetary policy. I bring this up to disgrace business personnel at Parties, where I am generally treated as a pariah. Inflation does make life easier for them, but possibly not for the general population. I am of the persuasion which believes that a Boom can be accomplished under deflationary conditions, and the fact that Recessions are caused by deflationary pressures could be false; a substance which I have never found proven. Production would be borrowing less Money, though at higher Interest rates, while Consumers would be facing declining Prices with Sticky Wages. The only hazard is the elongation of Credit length, thereby establishing greater search for collateral and stability. I specifically appreciate the reduced Employment by the financial sector, with a corresponding increase in Employment by productive sectors (think lowered entrance Wages, and lower exit Wages, both altered by varied labor demand).
The real Stickler for Economists is the increased Cost of Money, which they universally accept as an unacceptable restraint on new Production. They insist that the new Production is mandatory for economic boom, even though loose Credit makes an overwhelming amount of new Production very transitional and of low Profitability. An even greater of Share of capital investment is lost to unutilized equipment than is lost to Interest on the Credit. Economists adopt an extremely moderate definition of gainful employment of resources–both Labor and Capital. They demand only generation of Numbers, with no Accounting of lost Wages from periods of unemployment or Capital equipment sold as Scrap materials prior to justifiable Production levels. Such adverse effects are limited by high Interest rates and heavy collateral demands for Credit.
I have never liked economic arguments developed without a converse scenario. The Taylor Rule has no counter-Taylorism. I think Economists should reevaluate their basic positions, starting from a position of potential Production saturations. The Reader must understand that each economic or financial crisis differs from prior crises, due to the difference in capitalization per Consumer or labor unit. It is my thesis that there is a Production saturation point in every endeavor, where new Production cannot fund the capitalization needs for Production from Consumer Sales. Established Production has enough difficulty in funding their own regeneration capital because of competition with the area of saturated Consumer Demand. The Reader should have the understanding that this limitation has nothing to do with the expansion coming from advancing technology to reduce Production Costs. I believe it is still the dominant factor is the modern economic world. lgl