Guaranteed inflation?

Don't change the forecast; change the policy

I agree that it is likely that inflation will run below 2% in 2018. Nonetheless, I believe the Fed made a mistake by forecasting sub-2% inflation in 2018. Instead, the Fed should have changed its policy, so that it could continue to forecast inflation at 2% in 2018. This is what Lars Svensson means by "targeting the forecast."

Scott Sumner wants the currency banker to pay off the future bets on inflation to 'make it so' .   The target is some inflation announcement at a specific time.

The biggest uncertainty is the inflation index, consider a quarter point uncertainty.  If we estimate a slow down in inflation below target, the bets pile up and price trend drops another half point.  But we get inflation the next quarter.    But the cycle is priced and currency uncertainty becomes a  chaotic variance about the real trend.    But I think that is what Scott wants.  He distinguishes between forecast and target, his only outcome is a bound variance within which most goods and services can be priced neutrally.

I call it  being Wienerized, it occurs because anything like what Scott proposes becomes a fair access tradebook subject to all the rules of congestion, which match price variance.  The monetary stimulus Scott proposes comes from being able to target NGDP, doing it right means fair access, low transactions costs and auto-traded.