History makes clear that failure to put our fiscal house in order will erode the vitality of our economy, reduce the standard of living in the United States, and increase the risk of economic and financial instability. References Committee for a Responsible Federal Budget (2010). The CRFB Medium and Long-Term Baselines. Washington: CRFB, August. Congressional Budget Office (2010). The Long-Term Budget Outlook.
One feature of an analytical framework in which money plays no meaningful role and of a policy strategy in which the policy-rate is set without taking into account monetary developments is the possibility that the central bank may fail to anchor inflation expectations effectively.