Lunchtime Must-Read: James Pethokoukis: Is it time to retire the most important chart in the world?

James Pethokoukis: Is it time to retire the most important chart in the world?: “The gap between actual GDP and potential GDP…

…represents trillions in missing economic growth caused by a failure of the US economy to return to its previous trend growth path. The cost of the Two Percent Economy is staggering, and it’s a big reason — along with quiescent inflation — that “market monetarists” have been in no hurry to see the Federal Reserve do less. In fact, many would prefer the central bank do more — or, actually, do different. But at this point, economist David Beckworth thinks it’s time to look forward and forget about returning to the pre-crisis trend level…. That is reality talking. The Fed is winding down QE and will begin nudging up rates next year (hopefully avoiding a repeat of the Fed’s 1936-37 mistake). From this point on, I suppose, better to focus on crisis avoidance through smarter, rule-based, market-based monetary policy. That, and faster potential GDP growth through supply-side reforms in areas such as taxation, regulation, and education.