The Upper Bound in the Fed’s Head: Inflation

Continuing with one of my current hobbyhorses:

Ryan Avent reports on the American Economic Association meeting, with special attention to a presentation by Robert Hall:

Monetary policy: The zero lower bound in our minds | The Economist.

Mr Hall argued that:

A little more inflation would have a hugely beneficial impact on labour markets,

And a reasonable central bank would therefore generate more inflation,

And the Federal Reserve as currently constituted is, in his estimation, very reasonable; therefore

The Federal Reserve must not be able to influence the inflation rate.

… Why is Mr Hall–why are so many economists–willing to conclude that the Fed is helpless rather than just excessively cautious? I don’t get it; it seems to me that very smart economists have all but concluded that the Fed’s unwillingness to allow inflation to rise is the primary cause of sustained, high unemployment. …a macro challenge that actually boils down to the political economy constraints (or intellectual constraints) facing the central bank.

Emphasis mine.

I, of course, am less charitable, and impute other motives.

Hat tip to David Beckworth, whose feelings I fully understand:

I found the whole affair so depressing that I wasn’t able to drag myself to many sessions.

Cross-posted at Angry Bear.