After reading this:
It’s clear which way the Fed has erred recently. It has done too little. It stopped trying to bring down long-term interest rates early last year under the wishful assumption that a recovery had taken hold, only to be forced to reverse course by the end of year.
Given this recent history, you might think Fed officials would now be doing everything possible to ensure a solid recovery. But they’re not. Once again, many of them are worried that the Fed is doing too much. And once again, the odds are rising that it’s doing too little.
One of the reasons the Fed is concerned with inflation is its potential to reduce long-run growth. However, it’s not clear that moderate levels of inflation have this problem. Furthermore, the risks to growth are not one-sided. When unemployment is persistently high because of too much concern about inflation, this can also reduce long-run growth. The longer a person is unemployed, the more likely he or she will become permanently unemployable, or drop out of the labor force altogether. For younger workers there is evidence that a high unemployment rate at the time they accept their first job translates, on average, into lower lifetime income. The first permanent job – and the opportunities that may or may not come with it – is a very important determinant of lifetime earnings
this old tune by Paul Anka well captures the spirit of the moment!