Inflating Inflation
01/23/2014 | | Economic forecasting, Eisenberg and housing economics, Eisenberg and public speaking, Elliot eisenberg, Graphsandlaughs, MLS, Multiple listing service, Public speaking economist, econ70, economist on TV, economist on radio, eisenberg and economics, funniest economist, funny housing economist, graphsandlaughs and eisenberg, housing sales, mortgage banking, politics and economics
With short-term interest rates near zero and inflation very mild, real short-term interest rates (nominal interest rates minus the inflation rate) are slightly negative. To boost investment spending and the economy, the Fed should push real interest rates further into negative territory. Thus, rather than promising to keep interest where they are until unemployment falls to say 6%, explicitly announce a higher inflation target of 3%, not 2%.