Watch this wonderful rant from legendary economist and commentary Larry Kudlow.
Larry is of course right – it is highly problematic that the Federal Reserve now seems to have gone back to the kind of Phillip curve inspired monetary policy that caused the inflationary failures back in the 1970s. This time around it will led to deflation rather than inflation. The Fed should focus on nominal (NGDP or inflation) rather than real (unemployment or RGDP) variables.
I have of course written extensively about this. See here:
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