Mr. Fisher's analysis is severely flawed. First, much of the downward pressure on prices is not caused by the need for a lower "natural" rate. Nor will government intervention help much. Technology improvements are letting businesses create more with fewer people, which is increasing supply, where increased supply drives down prices. Cheaper products from lower wage countries, is driving prices down. Lowering interest rates or unconventional accommodative measures will not increase those prices. Second, businesses pass along interest rates to consumers in the form of higher prices. Third, raising short term rates will cause businesses like oil, natural gas, and commercial real estate to slow down due higher costs of revolving credit. This will reduce supply and stimulate inflation. Fourth, the Fed knows the above, but will not admit it for political reasons. The Fed is there to support the 1% and will continue to blow bubbles into the asset markets with the factious claim that the wealthy asset owners will spend more causing a trickle-down in wealth to the other 99%.
