Must-Read: Paul Krugman: The Fed Is Going to Be Wrong When It Eventually Raises Rates

Paul Krugman: The Fed Is Going to Be Wrong When It Eventually Raises Rates: “What we do know is that inflation is still below target…

…and what we also know from the experience of the last eight years is that it is really really hard to get an economy going if interest rates are at zero and you’ve shot your bolt on that…. If the Fed waits too long to raise rates, then we get a little bit of inflation. If the Fed raises rates too soon, we risk getting caught in another lost decade. So the risks are hugely asymmetric. I really find it quite mysterious that the Fed is eager to raise rates given that, they’re going to be wrong one way or the other, we just don’t know which way. But the costs of being wrong in one direction are so much higher than the costs of being the other.