The Fed Shouldn't Make Policy Based on Numbers

The reason people expected inflation is because they weren't idiots. They knew there was inflation. And so they obviously expected, you know, what was clearly coming. We had high inflation and it was going to continue. Those expectations and those price shocks were the result of the Fed policy. If Bernanke doesn't understand that, if he doesn't know why we had inflation during the 1970s and why the hell would he know why we have inflation now? Well, you already know the answer. It's because he doesn't understand inflation that he became chairman of the Federal Reserve. He wouldn't have a seat at that table if he understood where inflation came from.