Good monetary policy raises inflation during recessions

Moneybox notes that Ben Bernanke has the worst economic record on inflation since the great depression, but he thinks he is one of the best!

Testifying before Congress recently, Ben Bernanke bragged, "my inflation record is the best of any Federal Reserve chairman in the postwar period, or at least one of the best, about 2 percent average inflation."

Catherine Rampell's numbers show that Bernanke has, in fact, delivered the lowest inflation of any postwar Fed chair, coming in at an average of 2 percent. On the other hand, Floyd Norris notes that unemployment under Bernanke has been second-highest of any postwar Federal Reserve chairman. Now if you ignore the "postwar" qualifier, the picture looks different. Several Depression-era Fed chairs had less inflation and more unemployment than Bernanke. And putting those Depression-era bankers into the mix serves to highlight how absurd Bernanke's boast is. No sensible person would look at America's economic performance in the 1929-1933 period and say "man, they did a great job of fighting inflation."

It is true that inflation was very low—indeed, negative—for most of this period, but that simply goes to show they were doing a terrible job.

Suppose Ben Bernanke resolved to deliver enough aggregate demand to get the inflation rate up to its Greenspan-era average of 2.6 percent. Unless you believe there is literally zero slack or excess capacity in the economy, that would create some extra jobs and real growth. And was inflation so terrible in the Greenspan years? Nope. At the time, Greenspan-level inflation was considered a historic victory in the war on inflation.

Moneybox later points out that there are many prominent media voices calling for higher inflation on both the political right and the left, but almost no voices in positions of political power including at the Fed. 

I regularly give Ben Bernanke a hard time for the excessively tight monetary policy he's run at the Federal Reserve, and his most recent congressional testimony has been the chance for more of that. But in Bernanke's defense I should say that the really striking thing about his appearance is the utter and total lack of influence of dovish monetary policy views on Capitol Hill.

If you read a lot of economics coverage on the Internet, you'll be struck by the amazing success of "dovish" monetary policy views. I've been pushing them here at Slate, Ryan Avent pushes them at the Economist, Matt O'Brien pushes them at The Atlantic, Tim Fernholz and Miles Kimball push them at Quartz, Josh Barro and the Stevenson/Wolfers team push them at Bloomberg, Ramesh Ponnuru pushes them at National Review, Ezra Klein pushes them on Wonkblog, Paul Krugman and Tyler Cowen have both pushed them in the New York Times, etc. It's not like an overwhelming consensus or anything, but normally a political stance with this much representation in the media could find at least one significant politician to stand up for it. But while we have Obama's former Council of Economic Advisors Chair and the chief economist at Goldman Sachs on our side, we seem to have zero members of congress.

This is not an excuse for the Fed's too-tight policies ...but it's probably a reason for it. If nobody in congress objects to crucifying mankind upon a cross of 2 percent [core inflation] targeting then realistically it seems unlikely to stop.