Friedrich Hayek, as a guest on ‘Meet the Press,’ June 22, 1975.

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Remember when Ben Bernanke was a fan of a more transparent Fed, with bright lines on where inflation should be and how to get there?

“Inflation-targeting countries have achieved lower inflation rates and lower inflation expectation,” he wrote in his 1999 book Inflation Targeting: Lessons from the International Experience. “There is also evidence that the use of inflation targeting increases public understanding of monetary policy, improves policy-maker accountability, and provides a discipline-enhancing ‘nominal anchor’ for monetary policy.” In 2003 Bernanke said targeting in the 2% range seemed “the optimal long-run average inflation rate” for the U.S.

But since taking office, you’ll hear no such comments from the chairman. The reason? Reality. While the European Central bank’s primary concern is controlling inflation, the American Federal Reserve has the dual responsibility of maintaining both price stability and employment, making Bernanke’s job a tough one.

No one ever seems to look at those goals and ask why price stability is important and how exactly does what the Federal Reserve do which effects employment.
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