He can only think in terms of interest rates. Since that´s pegged at “near zero levels” he feels lost:
Policy rules also wouldn’t have done much for the Fed in recent years with interest rates pegged at near zero levels, Mr. Williams said in the text of a speech prepared for delivery before an audience at Chapman University in Orange, Calif. These rules would have argued for something not easily done, and that would have been for the Fed to have pushed short-term rates deeply into negative territory, he said.
Mr. Williams said the problem policy rules have with zero interest rates is probably not over. The use of unconventional policy stimulus like bond buying and other tools “are very likely to occur again in the future,” and rule-based policy-making will have nothing to contribute in such a scenario, he said.
Scott Sumner has just written a post that tries to understand the “stance” of monetary policy, and ends thus:
People are constantly telling me that my “tight money” theory of the 2008 recession is loony. But I am never provided with any good reasons for this criticism. I have no doubt that there are hundreds of macroeconomists who are much smarter than I am, but I do occasionally wonder if my profession is somewhat lacking in imagination.
Lack of imagination is exactly what John Williams (and his colleagues) exudes!