A Bad Inflation Idea That Won't Die

If there was any consolation in the Sunday New York Times front-page article, "In Fed and Out, Many Now Think Inflation Helps," it was that the "in Fed" names were few and far between. Yes, Federal Reserve Vice Chairman Janet Yellen, who was nominated to replace Ben Bernanke in January, is mentioned in connection with the idea that "a little inflation is particularly valuable when the economy is weak." But that was it.

Until now, targeting higher inflation as a cure for weak growth hasn't gained traction among the central bank set. I doubt that will change soon, even with the leadership rotation. Why? Because the Fed moves at a glacial pace. It took 17 years to evolve from announcing a change in the federal funds rate to holding a news conference to explain policy decisions. Given that the Fed first formalized its 2 percent inflation target last December, I doubt it's going to double or triple it anytime soon as some suggest.