If you haven’t already, get set for more of the same as the new normal. Central bankers have apparently forgotten all about the basics of supply and demand because nearly all of them at the annual Jackson Hole conference have pledged to keep interest rates low for the next two years.

Here are some quotes according to Joshua Zumbrun & Simon Kennedy from Bloomberg.com in their article about the conference:

Bank of England Deputy Governor Charlie Bean said the U.K.’s pledge this month to avoid raising interest rates before unemployment falls to 7 percent should restrain U.K. gilt yields and boost confidence among consumers and companies.

The Bank of England this month embraced so-called forward guidance by projecting it will keep its benchmark interest rate at 0.5 percent until late 2016 as it waits for the jobless rate to fall from 7.8 percent.

“The knowledge that monetary policy will not be tightened until the U.K.’s fledgling recovery is secured should boost confidence,” Bean said. “Moreover, it should reduce the likelihood that the present expansionary monetary stance is withdrawn prematurely through an upward movement in market interest rates.”

The wording in this article, “… as it waits for the jobless rate to fall…”couldn’t be more revealing regarding the intent. I don’t believe that even Pollyanna was as optimistic.

If we take Milton Friedman’s view on interest rates to heart, that low interest rates are a sign that money has been tight, it isn’t all that hard to figure out that a case of the Emperor’s new clothes is afoot. Doing nothing will keep interest rates low in the same way as doing nothing will keep inflation low. We still have the boat load of perverse incentives for doing nothing when something needs to be done that comes with an inflation target – central bankers pat each other on the back for not having breached the inflation ceiling as unemployment spikes and a financial crisis ensues – quite an absurd spectacle.

More and more I feel like I am living inside The Martix, trying to free people so they can see that a price stability mandate turns central bankers into excuse-making, slothful louses as the world goes to the deep hot place in a hand basket, one mind at a time. This just can’t be real.

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