In an article on Bloomberg.com, Mr. Bullard is quoted:
The ultra-easy monetary policy has been appropriate so far, but could reignite a 1970s-type experience globally if pursued too aggressively…Do not let the inflation genie out of the bottle.
I could agree with the second half of that statement, but it is hardly relevant, and the first wildly exaggerates the current experience. By applying the standards of 1970s inflation to the possibility of easing now, there is no possible version of reality where money could ever be too tight, especially when PCE core inflation, the Fed benchmark, has averaged 1.1% over the last 46 months, the natural rate of unemployment has been estimated by the Fed to be ~6.5%, but real unemployment is still above 8%. Is 25-50% variable inflation of rates between 0.5-2% really price stability at such a low rate? Maybe Mr. Bullard can explain what happens to the economy when core inflation declines, what causes the decline and what it means for unemployment. It’s quite easy to explain what happened in 1970s, but what about now and how does that relate to the Fed’s legislated mandate from the Full Employment and Balanced Growth Act of 1977?
An Act to translate into practical reality the right of all Americans who are able, willing, and seeking to work to full opportunity for useful paid employment at fair rates of compensation…
…to assert the responsibility of the Federal Government to use all practicable programs and policies to promote full employment, production, and real income, balanced growth, adequate productivity growth, proper attention to national priorities, and reasonable price stability…
[The Fed] shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates
But maybe I am wrong. Silly me for thinking that ultra low inflation, FF and interest rates, banks hording reserves and high unemployment were signs of tight money and monetary policy failure. Maybe I should just go put my tinfoil hat back on and sit in the corner conversing with aliens. Really, though, Mr. Bullard needs to get a grip on reality and stop trying to invoke the inflation boogeyman to cover up his, and his colleagues’ epic failure.
And this quote from the same article is a real doosey, especially since Mr. Bullard likes to relate the monetary policy failure of today to the 1970’s:
If anything, the Committee may be trying to do too much with monetary policy, risking monetary instability for the U.S. and the global economy,” Bullard said, saying labor-market policies can better address high unemployment. “The Committee can respond as appropriate to a significant deterioration relative to the current forecast.
Is he for price controls and market interventions like the Fed forced supply-side policymakers to do in the 1970s because it couldn’t figure out its own problems?
Mr. Bullard, you are incompetent and are a greater menace to society than any inflationary FOMC member in the 1970’s. You should do us all a favor and resign now.