What is the Fed supposed to do?

We have the Keynesians who claim that we are in a general glut and standard economic rules do not apply.  Yet they have not explained to anyone how exactly we got into a general oil glut, because oil is the constrained resource, has been since the crash.

Sumner wants the Fed to target NGDP as if we were back to potential growth.  Great idea, but the only way they to do that is to target a yield curve that predicts a return to potential growth in NGDP.

During all the rhetoric, oil still hangs in the $75-80 range, the sweet spot for oil has barely budged since the crash.

We will return to potential growth in NGDP as Sumner wants, the economy will contract sufficiently to maintain that growth.  In other words, if oil is constraining, its supply will be increasingly limited until there is surplus oil for the part of the economy that is still monetized.  The Fed cannot stop that from happening.