Discussion on the potential danger of maintaining a rigid interest rate target.
1. Those who advocate which the Federal Reserve target monetary aggregates usually argue which the Fed should not alter its monetary targets in response to temporary changes in macroeconomic conditions, yet those who advocate interest rate targeting never recommend which the Fed maintain a constant federal funds rate target. Elucidate why not? (Illustrate what's the potential danger of maintaining a rigid interest rate target?)
2. If excessively rapid growth in the money supply is associated with all inflationary episodes, Elucidate why do central banks ever allow the money supply to increase so rapidly? Is the current Federal Reserve monetary policy in-line with the same notion?