I found Cullen’s assessment of inflation rather interesting, particularly because it’s the first time I read about someone’s worry as to the Fed’s policy over the longer-term.
I’ve been very negative on the use of QE as a policy option, particularly because of the potential long-term ramifications.
I wrote this piece more than a year ago, but felt compelled to include it here. I’m not saying that the scenario outlined in the article is where we’re definitely going. But every time I hear about implementing myopic monetary policies such as those espoused by Mr. Evans and Goldman Sachs —setting a target for the unemployment rate and nominal GDP respectably—, I feel that the probability of my scenario occurring increases (albeit it remains at a low probability still).
Proceeding with these strategies would be a red flag for eventual stagflation.