My pal David Beckworth writes the post I’ve been eager for him or some other market monetarist to write. Beckworth asks (and answers): Has Fed policy been overly tight?

Given the continued sluggish pace of the recovery and the start of the Fed’s tightening cycle, this seems like a legit question. But it is even more so now given weakening global growth, plunging oil prices, and stock market rout. As Beckworth sees it,  “… macroeconomic policy has not been very supportive of a robust recovery over the past few years.” Among his reasons are that inflation has “consistently fallen below the Fed’s two percent inflation target for the past seven years” and “household portfolios still inordinately weighted toward safe assets.”

So should the Fed be doing more? Well, sure — but that assumes a greater tolerance for inflation. And Beckworth is skeptical:

There is no way the Fed or Treasury could have spurred significantly more nominal spending growth without there being a temporary increase in the inflation rate. And that is simply intolerable in the current environment. The safe asset shortage problem and inability of the Fed to get much traction is simply a symptom of this problem. That is one reason why I am a big advocate of NGDP level targeting. It would allow for temporary deviations in the inflation rate while still providing a credible long-run nominal anchor. Until we get something like this, expect regular bouts of macroeconomic policy being overly tight.

Here’s more NGDP level targeting.