This is actually quite correct. The Fed Funds policy interest rate is a clumsy instrument because it involves chasing the ever-shifting balancing point of an in

This is actually quite correct. The Fed Funds policy interest rate is a clumsy instrument because it involves chasing the ever-shifting balancing point of an inherently unstable system. You "cut" rates to increase money creation, which actually pushes your long-term rates higher due to expected inflation and leads to even more money creation for a constant policy rate, and vice versa. This can all be fixed very simply by changing the instrument to a crawling exchange rate peg, which has an inherently stabilizing effect, as seen from the effectiveness of currency board systems - that system doesn't shift against you if you stick to a bad peg, whereas it very much does if you stick to a bad policy rate. The long term policy goal (stability in the path of nominal incomes (prices + real activity) in the very short run, and prices in the medium-to-long run) would be unaffected, but the whole operational aspect would be simplified quite a bit.