Friday morning, the Bureau of Labor Statistics reported that consumer prices in the United States rose just 0.8 percent in 2014 — the lowest level since the crisis year of 2009. This will raise concern among economic wonks that inflation is running at a dangerously low level and undermining the "credibility" of the central bank's 2 percent inflation target. Meanwhile, normal people — jumping for joy at cheap gasoline and excited by the prospect of modest 1.6 percent price increases outside the realm of food and energy — will think the wonks are insane.
Here's a better way to think about it. The low inflation isn't a bad thing, exactly, but it's a sign that the Federal Reserve has an opportunity — one it's not necessarily taking advantage of — low interest rates.
