Samuelson explains both sides of the debate. Krugman wants Fed to push for higher inflation but Bernanke does not agree. He nicely sums up:
None of this is preordained. Krugman’s theory could be right. It responds to an understandable urge to do something about the feeble recovery and the millions left without work and hope. But in this debate, I side with Bernanke. Flirting with more inflation is treacherous. If inflation expectations change, the consequences are hard to predict. The double-digit inflation in the late 1970s (peak: 13 percent) resulted from well-intended mistakes and unleashed many damaging side effects.
What we should have learned since 2008 is that the Federal Reserve can’t do everything and overambitious goals guarantee disappointment. The larger lesson is that economists have exaggerated their understanding and control of the economy. People often don’t act according to academic theories. There isn’t a proper policy response for every need. This captures our frustration.
Well 2007 crisis was an event where many crisis policy prescriptions have fallen just flat. You really do not know what really works. And all along econs made us believe they know what is going on…