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>This dynamic is why the Fed needs to break the attitude that its job is to keep inflation as low as possible. I'm not sure where you've been the last 5 years,

>This dynamic is why the Fed needs to break the attitude that its job is to keep inflation as low as possible. I'm not sure where you've been the last 5 years, but the current Fed has not in any way had a policy of trying to keep inflation low. Not in the slightest. Bernanke is extraordinarily paranoid about deflation and as such has had 0 interest rates since the crisis started. In addition to that, they are printing 100's of billions of dollars and piping it to the markets. The balance sheet of the Fed is in the trillions now. This is the exact opposite of trying to keep inflation low. Now, I'm not going to argue for or against this policy here, I'm just pointing out that they haven't been trying to keep inflation low. That being said, there is ample evidence that "high" inflation sucks. There is also ample evidence that deflation sucks.

nhaehnle 13y ago
How can you argue that doctors care about avoiding high blood pressure? I don't know where you've been, but I've been watching those doctors here trying to help a bleeding patient, and not once have they done anything to prevent high blood pressure. They've even given him transfusions to increase his blood pressure. That's the exact opposite of trying to keep blood pressure low.
yxhuvud 13y ago
That assumes that the fed beleives that a big balance sheet of the Fed leads to inflation. However, they (so far) rightfully do not believe that, and there are next to no inflation to see. http://libertystreeteconomics.newyorkfed.org/2011/06/will-quantitative-easing-trigger-inflation.html http://libertystreeteconomics.newyorkfed.org/2011/06/will-qu...