Mainly central bankers are dumber than horse shit. The Taylor rule is all about the central bankers repairing a stupidity that they performed in the past. The basic idea is that prices instability is caused by central bankers.
Normally, when prices rise, in a stable economy, then shortages have arrived. In that case the central banker would lower rates, the sign would be reversed in the coefficient on inflation.
But the Taylor rule reverses the sign using the Milt Friedman axiom that bankers are idiots, they discover errors they have made in the past. Miilt was right, actually, as Milt himself represents four generations of economists who have no idea how pricing works. Milt called the economic theory of pricing the 'puzzle'. Keynes called it the 'animal spirit'. Brad DeLong came right out and admitted that current pricing theory was 'clueless'.
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