Thanks for the welcome, Ben.
My question is that why do we assume that the Fed can produce inflation at will? Japan was stuck in deflation for 13 years - maybe they're out now, but maybe not.
It seems what Nystrom is saying is that deflation is more of a psychological thing than a money thing, and the Fed has realized that, so they're acting accordingly - i.e. messing with our heads.
IMHO, I think you are being too smart by half. Deflation isn't and hasn't been a legitimate fear. Yes, there's been a lot of talk about it, but I don't see it happening and I don't think the Fed does either. Inflation is a concern, but not a huge one. The Fed STILL does not fully believe that we can grow at 5% to 6% without the fear of inflation, but productivity and technology say we can. Cheap international labor says we can. But the new head of the Fed IS flexing his poker playing skills.
Given enough stimulus the economy will require additional labor. The resulting competition for labor will lead to rising wages.