Well, his {Laurence Ball} argument is that at a higher inflation rate, then nominal interest rates would also be higher, on average, and that would give more space to cut during a recession, and perhaps more ability to create impetus.
So that's not a logical argument, but it has substantial risks which are -- you know, we, the Federal Reserve, over a long period of time, has established a great deal of credibility in terms of keeping inflation low, around 2 percent, roughly speaking. And you can see that, for example, in inflation-indexed Treasury debt, which shows that people expect, over the next 10 years, about 2.2 percent inflation, on average, over that 10-year period.
If we were to go to 4 percent -- and, say, we're going to 4 percent, you know, we would risk, I think, losing a lot of that hard- won credibility, because folks would say, 'Well, if we go to 4, why not go to 6;' and you go to 6, 'why not go to 8?' It'd be very difficult to tie down, credibly, expectations at 4, beyond which, of course, in the longer-term low inflation is good for the economy, and 4 percent is already getting up there a bit, and would probably have detrimental effects on the functioning of our markets, and so on.
So I understand the argument, but that's not a way -- that's not a direction that we're interested in pursuing. We're going to keep our inflation objectives about where they are. We think about 2 percent is about appropriate, given biases and measurement of inflation, and given the need to have a little bit of space between the average inflation rate and the risk of having deflation or falling prices. So that's where we're going to be -- that's the path we're going to be following.