The first graph shows alternative measures of “core” CPI inflation. Note: It´s a good thing that inflation turned up following QE2. In that sense, QE2 is working. More significantly, if most were happy with the inflation observed in 2005-2007, the present level of inflation is “bad”, especially because it is the result of a deep plunge in nominal demand (AD). 
Figure 2 shows that there is “heat” and “light” concerning inflation. This comes from the Atlanta Fed Inflation Project. They calculate (both for the CPI and the CPI-Core) the rate of inflation for the “flexible” and “sticky” components. We observe it´s “dangerous” to pay undue attention to the “heat” generated by the flexible component. This may have been the BIG mistake made by the Fed in 2008! 
Figure 3 illustrates the fact that when you are inside an inflation process, like in the 1970s, ALL prices move in the same direction. “Sticky” prices become “unstuck”, the hallmark of an ongoing inflation process. 
Historinhas 
Very good. I was thinking in some post about it, but this is perfect.
miguel
One of the big advantages of NGDP targeting is that the “inflation obsession” that characterizes modern MP goes away!
Yes, true, but I´m definitely skeptical abouy only one indicator-objective. At the end, Greesnpan got it with his risk management.
I´m against CPI, of course, it is non sense. It is stupid. But if we think that the money demand is not so stable, a more ample degree of maneuver is needed.I mean that perfection is imposible, and I prefer the double mandate of the FED that Inflation below 2% of ECB. NGDP would be my favorite, but not the only one.
Apart this, there is the problem of financial stability, an other different history.
“Figure 3 illustrates the fact that when you are inside an inflation process, like in the 1970s, ALL prices move in the same direction. “Sticky” prices become “unstuck”, the hallmark of an ongoing inflation process”.
Indeed. But given that sticky inflation lags flexible price inflation, how is one to know when sticky prices have become unstuck? Looking at the chart you display, by the time sticky inflation breaks to a moderately concerning level (as was happening toward the end of 1973), flexible price inflation has already risen to disastrous levels (and has sufficient momentum to make getting inflation back under control a very difficult task indeed).
If one isn’t to attend carefully to flexible price inflation, how is one to know what lies ahead? I think you can critique the Fed’s poor judgement (it was rather obvious by July 2008 that the economy was slowing, and would bring down both commodity prices and headline inflation), but it’s tough to say that it was their attention to flexible prices as such that was mistaken.
CB – If you don´t “relax” I´ll let Benjamin Cole loose on you! DON´T look at inflation. Look at what´s happening to NGDP (aggregate demand or nominal spending). You´ll see that in the 1970´s spending was on a continuous upward trend (that´s why all prices – core AND headline (flexible) went up. In 2008 the Fed let spending dive. When that happens…