The Federal Reserve has failed to control inflation for three straight years

The Fed, America's central bank, has two jobs. It's supposed to maintain full employment, and keep inflation from getting out of hand. Most people interpret the latter objective as simply stopping inflation from getting too high, but the responsibility actually goes two ways. Inflation also must be kept from getting too low, because it represents a shortfall of aggregate demand, prevents quick price adjustment, and makes a liquidity trap harder to avoid. Price stability, neither too low nor too high, is the mandate. That's defined by the Fed itself as an inflation rate of 2 percent.

Economist Jared Bernstein, in a letter to Fed Chair Janet Yellen, points out that the Fed hasn't hit its inflation target for over three consecutive years — and it's actually getting worse over time:

The Fed is reportedly likely to raise interest rates — so it can get ahead of increasing inflation, supposedly — in September. It is hard to explain why.

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