My main critiques are (I) Zero inflation isn’t generally optimal once real-world frictions matter. (Ii) With downward nominal wage rigidity, a little inflation “greases the wheels”; pushing toward zero can worsen unemployment. (Classic results: Akerlof-Dickens-Perry.) (iii) ZLB makes deep recessions harder to fight; which is the reason the fed targets ~2% or even higher to create policy space. (iv) Measured CPI is upward-biased (Boskin Commission), so a zero measured target risks true deflation. (v) Surveys and theory syntheses find the “optimal” long-run inflation rate typically at or above zero, not strictly zero. 
Pegging to a traded-goods/commodity index imports volatility and shocks: (i) A commodity-linked anchor transmits supply shocks into domestic prices and activity; the historical gold standard’s rigidity famously amplified the Great Depression. (ii) Even advocates of commodity-price rules (e.g., Frankel) frame them as niche (e.g., commodity exporters) and acknowledge trade-offs, not universal prescriptions, contrary to a one-size “ideal.”  (iii) “Currency competition will discipline everyone” runs into network effects and dollar dominance.
Specific limitations of Nash’s system (i) Pro-cyclical and shock-sensitive if anchored to a commodity/traded-goods index: supply-side swings tighten/loosen policy at the wrong times (gold-standard lesson). (ii) Insufficient policy space at the ZLB: a zero trend target heightens the risk of long slumps; a modest positive target is a safer buffer. (iii) Measurement risk: CPI bias implies “zero” on the gauge can mean true deflation. (iv) Weak disciplining in practice: network externalities and dollar invoicing mute the competitive pressure Nash expects from currency comparison. (v)Trilemma constraint: countries can’t simultaneously keep a hard external anchor, open capital flows, and independent stabilization policy; one lever must give. (vi) Institutional fragility: without explicit commitment devices/governance (beyond “transparency”), rules are vulnerable to time-inconsistency and political drift. 
1 Comment
There a several issues with his proposals.
My main critiques are (I) Zero inflation isn’t generally optimal once real-world frictions matter. (Ii) With downward nominal wage rigidity, a little inflation “greases the wheels”; pushing toward zero can worsen unemployment. (Classic results: Akerlof-Dickens-Perry.) (iii) ZLB makes deep recessions harder to fight; which is the reason the fed targets ~2% or even higher to create policy space. (iv) Measured CPI is upward-biased (Boskin Commission), so a zero measured target risks true deflation. (v) Surveys and theory syntheses find the “optimal” long-run inflation rate typically at or above zero, not strictly zero. 
Pegging to a traded-goods/commodity index imports volatility and shocks: (i) A commodity-linked anchor transmits supply shocks into domestic prices and activity; the historical gold standard’s rigidity famously amplified the Great Depression. (ii) Even advocates of commodity-price rules (e.g., Frankel) frame them as niche (e.g., commodity exporters) and acknowledge trade-offs, not universal prescriptions, contrary to a one-size “ideal.”  (iii) “Currency competition will discipline everyone” runs into network effects and dollar dominance.
Specific limitations of Nash’s system (i) Pro-cyclical and shock-sensitive if anchored to a commodity/traded-goods index: supply-side swings tighten/loosen policy at the wrong times (gold-standard lesson). (ii) Insufficient policy space at the ZLB: a zero trend target heightens the risk of long slumps; a modest positive target is a safer buffer. (iii) Measurement risk: CPI bias implies “zero” on the gauge can mean true deflation. (iv) Weak disciplining in practice: network externalities and dollar invoicing mute the competitive pressure Nash expects from currency comparison. (v)Trilemma constraint: countries can’t simultaneously keep a hard external anchor, open capital flows, and independent stabilization policy; one lever must give. (vi) Institutional fragility: without explicit commitment devices/governance (beyond “transparency”), rules are vulnerable to time-inconsistency and political drift.