Noah Smith is doing something very wrong. The whole point of monetary policy at the ZLB is to create inflationistas. We need more inflationistas, not less, and so Noah should stop dumping on them, and saying their fears of inflation are groundless. For every inflationista destroyed by us laughing at their fears, central banks have to work extra hard to create stronger grounds for their fears and so create a replacement inflationista.
But we've got to be careful to make the important analytic distinction between outside and inside inflationistas. We want more of the former, and fewer of the latter. So it might depend on whether the former or the latter read Noah's blog.
It's a crazy old world, but that's the world we live in. And strictly speaking what we ideally want to create is not inflationistas but, ummm, "NGDPgrowthistas" (defined as those with a fear of suddenly high NGDP growth), but I'll take what comes.
We can define the looseness of monetary policy as the difference between two index numbers, Io and Ii:
Looseness = (Io-Ii)
where Io is defined as "outside inflationistas" or "percentage of inflationista sentiment in the general public outside the central banks", and Ii is defined as "inside inflationistas" or "percentage of inflationista sentiment inside the central bank". (Nerds might prefer a weighted average of sentiment rather than a simple percentage, but they're just being nerdy.)
(I would have defined them the other way around, by analogy with inside and outside money, but I thought this might confuse people who aren't serious monetary economists.)
Outside inflationistas think that monetary policy is too loose, so rush to spend their money now. Inside inflationistas also think that monetary policy is too loose, so rush to tighten monetary policy now. Obviously, the two groups of inflationistas have equal but opposite reactions on the economy.
Or, since what matters for monetary policy is 99% expectations of the future, and only 1% what happens today, a better measure of the looseness of monetary policy would be:
Looseness = 0.01(Io-Ii) + 0.99Ep[(Io-Ii)]
where Ep is public expectations of future "fundamental" looseness (Io-Ii).
So, to sum up, if you want a looser monetary policy you need to do three things:
1. Increase outside inflationistas.
2. Decrease inside inflationistas.
3. Increase expectations of outside minus inside inflationistas by going round yelling "Everyone except the Fed knows the Fed is going to create a lot of inflation, but those crazy fools at the Fed don't get it and never will! So spend your money now, while it's still worth something!"
Or, if you wanted to be boring, you might try to persuade the central bank to adopt an NGDP path target.