After Lacker made his exposition, Bernanke intervenes:
CHAIRMAN BERNANKE. I am going to regret this, but I am going to ask you a question. [Laughter] Do you think the United States economy is at a Pareto efficient point at this moment?
- LACKER. Probably.
CHAIRMAN BERNANKE. With the best position we can be at right now?
LACKER. Roughly speaking. All constraints taken on board.
I stopped reading there and then!
So I link to a summary of the Transcripts in Bloomberg. It´s all very “political”:
As President Barack Obama prepared to take office in January 2009, Bernanke recounted a meeting with members of the new administration that included a discussion of the Fed establishing an explicit inflation target.
“I did not detect any strong opposition on the substance, but they didn’t want to incur heavy political costs themselves or use up political capital at the beginning of the administration,” the Fed chairman said, according to the transcript. “Their view was that whatever we did needed to be very carefully managed to avoid getting blown out of proportion in the political sphere.”
It took another three years for IT to come into being! And the Fed has undershot the target ever since!