Following a forum discussion by San Francisco Federal Reserve president John Williams, along with Stanford economist John Taylor, at the Nikko Hotel in San Francisco, as part of the regular Commonwealth Club of San Francisco forums, a separate press conference was held for the financial media with Williams.
I was able to ask Williams about a comment that Steve Forbes made during an interview with Money Metals Exchange.
The interview has not yet been published but a copy was provided to me and I received permission from Money Metals to ask Williams about this Forbes comment:
One other example on that is Janet Yellen, the head of the Federal Reserve, says that we should have two percent inflation, which in her mind is seeing the prices rising two percent a year. If you take a typical American family making fifty thousand bucks a year, that means their costs would go up a thousand dollars a year, two percent of fifty thousand. Who gave her the authority to raise the cost of living, which is an effective tax, a thousand dollars on a typical American family? Yet Congress, they just nod their heads. It's a travesty.The response by Williams is below. Please note, the nature of these type press conferences is such that you can't really debate. It's ask your question then the next questioner is up. So I pushed it by even asking Williams about 3% inflation, there was no way I could debate him on the entire concept that inflation somehow magically boosts productivity,
But, anyway, I believe Williams' answer provides a general reflection on how Fed members now think about inflation and their justification for creating price inflation.
Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics
UPDATE: The full Steve Forbes interview is now online here.