I am sure my readers would wrinkle their eyebrows upon utterance of the name Brad DeLong. After all, this is a guy who regularly calls all Republicans hacks and does not shy away from throwing his opponents under the ad hominem bus. But that does not mean you ought not read some of the things he writes about. He did, after all, get where he is for a reason. For example, when I do a series of lectures on living standards in my intro econ class, one of the tools I use is one I first saw in a Brad DeLong paper that talks about a better way to think about how “prices” for goods change over time. It is a very simple and clever and powerful approach.
I have even enjoyed and benefited from reading his thoughts on health reform utopia. While I disagree with the fundamental preference at the bottom for single payer, there’s not a lot there to object to.
So I encourage you to read his post today on fiscal policy versus monetary policy. Notice he is using well established theory and laying out suppositions for you to challenge if you want to dispute what he is thinking about. What is most valuable in his argument is that it makes it pretty clear that there is a blurrier line between “fiscal policy” and “monetary policy” than our textbooks would lead you to believe. The most valuable part of the piece to me is where Professor DeLong starts sounding like … an … Austrian:
In addition, there are the behavioral-finance fears: a market in which interest rates are very low is a market in which many financial institutions will make inappropriate judgments about long-run risk and return, as they find themselves driven by institutional and other imperatives to “reach for yield”.  A low cost of funds makes mark-to-model accounting easier to sustain. When the cost of funds is substantial, maintaining positive cash flow requires much more frequent testing of models by marking-to-market. And an entire financial industry engaged in unchecked mark-to-model accounting is dangerous.
It is important to get the overall level of production right–to match total spending to potential output. It is also presumably important to direct spending toward high-value commodities. It is important to get the balance between private and public purchases right. And it is important to get the balance between short-duration and long-duration assets right.