For The Birds
So if there isnt a big divide on the inflation target, what is the difference? The answer is that the hawks believe in immaculate inflation they believe that a large Fed balance sheet can translate into an inflation surge even with the economy depressed.
Its not clear how they think this would work; who, exactly, is going to raise prices in the face of all that economic slack? At some level, however, I think the hawks view what were going through as a supply-side phenomenon; they dont really believe that we are suffering from a demand shortfall, and they also dont seem to think that the zero lower bound makes any difference.
And the crucial point is that they have been wrong every step of the way, but keep demanding monetary tightening anyway.
So the hawks arent people willing to do what needs to be done; theyre people with a strange compulsion to do what doesnt need to be done. And thats why we need more doves at the Fed.
http://krugman.blogs.nytimes.com/2013/07/31/for-the-birds/