Larry and Philip both completely misunderstand my point. There should be no confusion if the Fed does it right. Imagine you have two passengers in a car. One of them wants the driver to get there faster. The other one is worried about getting a speeding ticket. The driver tells them both: “Look, I have cruise control, and I have a CB radio where they tell me if there are any cops out. I am speeding up from 70 to 73. So I’ll be going faster, but the cruise control will make sure I don’t go TOO fast, and I’ll slow down again at the first sign of trouble.” That’s not confusion, that’s clarity — the sort of clarity that satisfies both of them. That’s what I am suggesting the Fed should do: Put the foot on the accelerator just a tiny bit, while announcing that its bias is in favor of slowing down again at the first sign of trouble. Why doesn’t that make sense?
