Ryan Avent wants inflation

The dark clouds around the silver lining

But the Fed also projects that inflation (both headline and core) will be at most 2% in 2016 and 2017. In 2015 inflation (both headline and core) will be below 2%, even if it runs at the high end of the Fed's central projected range. Not a single FOMC member projects that inflation, in either headline or core terms, will be any higher than 2.2% at any point between now and 2017. That, apparently, is what is considered running an economy hot these days. In 1986, when core inflation dropped from around 4% to just below 3%, the Fed responded with a quick series of rate cuts, totalling about 150 basis points. In 2015, by contrast, the median Fed member reckons the federal funds rate will rise by about 100 basis points, despite the fact that core inflation is anticipated to be at most 1.8%. Indeed, over the next three years the Fed intends to raise interest rates steadily in order to keep inflation from ever topping 2% for any meaningful amount of time.

 Let's look and see what inflation is doing.  It has gone down. Focus in on inflation since Q3 2011, the last part of the chart.  It has trended down, meanwhile growth has trended up. Q3 2011 is important because that was the period when the stimulus almost crashed the economy.  We figured out that Ryan's idea of crashing the economy is not good. 

Ryan has to explain why mis-pricing the cost of labor and goods makes any sense, as any normal person would think that accurate pricing represents a healthy economy.  In fact we see that inflation up is a strong indicator of growth going down.  Is this what they teach in Keynesian school? Deliberate mispricing is good?