Fed’s Court Jester Flip-Flops Again: Low Inflation Scold Bullard Now Sees “Inflation Moving Higher”

It is self-evident that James Bullard’s primary constant in life is to appear on CNBC to bloviate about the twists and turns of his own befuddled monetarist thinking. As shown below, during the course of the last 12 months he has shifted his fundamental viewpoint no less than three times.

First he was loudly urging the Fed to do even more money printing because inflation was under-shooting the Fed’s 2% target from below. Then he cautioned about tapering too fast because there was nary an inflationary cloud on the horizon. And today he apparently came full circle, contending that inflation is “moving higher” and that the time for tightening may quicken.

And, no, this is not a case of Keynes famous aphorism in which he held, “When the facts change, I change my opinion. What do you so, sir?”

Indeed, Bullard is the hopelessly befuddled legatee of the Milton Friedman monetarist camp which became institutionalized at the St. Louis Fed decades ago. So Bullard’s preposterous flip-flopping is actually not merely a measure of his own questionable competence as an economists, but far more so an indictment of his mentor’s preposterous notion that 12 members of the FOMC could ever know enough about the facts of the US economy and financial system, and for long enough, to steer the monetary control dials at precisely the correct rate. That rate, of course, was 3% once you got the starting point correct.

Bullard’s embarrassing bloviations are thus perhaps the best refutation of monetarism and fiat central banking that has yet come along.

By Greg Robb at MarketWatch

There is evidence that inflation is now “moving higher,” said James Bullard, the president of the St. Louis Fed, on Monday.

This is a significant shift in Bullard’s outlook. Only last month, Bullard said that inflation was stable and any uptick in price levels was just a forecast.

Last year Bullard was very concerned about low inflation, even dissenting from a Fed policy statement over concern the central bank wasn’t doing enough on the issue. “With inflation still below target, albiet rising, and unemployment still high, but falling, the Fed faces a classic monetary policy challenge…how quickly should the committee move to return monetary policy to normal given improving labor market conditions?” Bullard asked.

In his prepared remarks, Bullard did not venture an answer his own question about the pace of policy tightening, saying only that the debate is likely to “garner significant attention” as the economy continues to improve. Bullard is not a voting member of the Fed policy committee this year.

Published at Marketwatch