Rates of Change

Matt Yglesias works to bolster his detractors and undermine his defenders by failing to recognize the difference between prices and inflation. Yglesias quotes Richmond Federal Reserve Bank President Jeffrey Lacker saying that the Fed's job is to "keep inflation low and stable." In fact, Yglesias notes, the mandate is (per a FAQ on the Fed's website): "maximum employment and stable prices." Yglesias concludes that inflation should be steady, not necessarily low.

Okay, but. Inflation is a rate of change. If prices are to be steady, then inflation will need to be pretty low. One would not consider prices to be steady if they were increasing at a 1,000% annual rate, though inflation could be very steady in those circumstances.

Just . . . sigh.