Over the past two decades, the Federal Reserve has learned what it takes to run a sensible monetary policy. Inflation-phobic investors are eager to help out the Fed by sending interest rates soaring at even a hint of rising prices. Vast technological changes, the opening of international markets, and rising American productivity are driving prices lower. The long-term payoff from a relatively stable general level of prices could be huge. Prices would become a reliable signal that tell companies how the marketplace truly values the goods they make and the services they sell.
Price stability allows for faster economic growth and higher living standards.
Of course, we could still get brief, nerve-wracking bouts of inflation. We could also suffer through dark, dismaying episodes of deflation, especially when the next recession strikes. The battle for price stability is never-ending. It is still true.