Mysteries of Deflationary Bias

Guest hosting for Rachel Maddow last night, Chris Hayes brought complaining about the Fed to a new medium:

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He’s the TV expert, not me, but I actually think explaining this through analogies makes it more complicated than it needs to be. The Fed controls the money supply. If you create too much money, the money becomes worthless and we get inflation. But right now the price level is way below its trend rate, so we need more money to create more inflation to stabilize the economy.

Meanwhile, the main arguments against more aggressive action are twofold. One is the (incorrect) argument that it can’t work, and the other is the argument that if the Fed creates more inflation to save the economy then we’ll . . . have more inflation which is bad because . . . well . . . because of some reason. But all we’re talking about is creating the inflation rate we had when it was morning in America and nobody thought inflation was out of control.

Joe Gagnon offers some specifics as to what could be done.

Meanwhile, it would be nice if the Fed’s Open Market Committee actually took proper votes. I wonder to what extent the inaction is being driven by regional Fed Presidents who are appointed by private, for-profit banks and then given policymaking authority.