The reason I support GDP targeting is that I believe the slow, steady growth in money expenditure provides the least bad macroeconomic environment for microeconomic coordination. Letting everything else--interest rates, the price level and inflation, the unemployment rate, and real output--adjust according to market forces is desirable. Having technocrats use "monetary stimulus" to manipulate unemployment and inflation to maximize a "social welfare" function is wrongheaded.
Monetary Freedom: The Economist on Targeting Unemployment
The same goes for having the Fed set inflation and letting NGDP adjust.
The same goes double for having the Fed set the price of a single commodity (especially gold) and letting inflation and NGDP adjust.
The same goes triple for having the Fed set the price of a commodity like oil (or refined gasoline) and letting inflation and NGDP adjust. The current recession was caused by the Fed's decision to target the price of oil in 2008, and the 'double-dip', which is really just the prolongation of the same recession, is most likely caused by the Fed's attempt to bring down the price of oil in the summer immediately past.
