This post is just a footnote to Marcus Nunes’s demolition of Glenn Hubbard’s recent comments on Fed policy, pointing out that Hubbard, as late as July 2008 when the US economy was rapidly contracting in the run-up to the impending financial crisis, was warning that monetary policy was too easy. OMG he though monetary policy was too easy in 2008! Just to put things into a little clearer perspective, here is a comparison of the monthly year on year change in the CPI in 2008 and 2011.
As you can see, the monthly year-on-year change in the CPI, driven by rising oil and food prices, was running at over 5% in the summer of 2008, providing the inflation hawks on the FOMC with the ammunition they needed to keep the Fed from easing money in time to avert the financial catastrophe down the road. And now with inflation running 2 percentage points lower than it was in 2008 before the crash, we are again being warned that inflation is the problem. Plus ca change.