Time to Deploy the Helicopters!

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Nobody should be satisfied with 96K jobs a month, but that’s about what you’d expect given the Federal Reserve’s commitment to a ceiling of 2% core price inflation.

In all of the countries that are actually experiencing a more robust recovery right now, you see *some* prices rising in tandem with the faster real growth. Young people move out of their parents’ basements, and increasing demand for housing and that pushes up rents. More people start driving to work, and that pushes up gas prices. All these things would register as higher “inflation” in the CPI index, but that’s all a natural part of the recovery. As long as Ben Bernanke and the hard money crew (including Philly Fed President Charles Plosser) are committed to a 2% ceiling for CPI, we’re stuck with weak growth. It would be better if they promised to keep interest rates low for a couple years after the recovery starts in earnest, even if that means CPI goes over 2%.

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