Agreed about the 2-3% target. Seems like a crazy low target for a country that has been, historically, a strong exporter. Or at least seems to want to be an exporter. I wonder if one of the reasons behind this low target rate is that inflation will ultimately decide how expensive government debt is, since under normal circumstances people will want their bonds to at least pay out enough to cover inflation.

> But higher inflation implying that “rates should go up” is central bank doctrine. It’s not a general law of how economies function.

Let's put it this way then: the central bank can raise rates or it can crash the economy into a brick wall. In that sense, rates should be raised. We have the least competent regime in history right now though, so they might choose the latter option.

> higher inflation implying that “rates should go up” is central bank doctrine

Uh, no. If you have no central bank, more consumption and more employment means more demand for money. Ceteris paribus, that will raise rates. (Our own history with free banking is more complicated since the only inflationary period was driven by specie introduction from California's gold rush. The predominant problem in antebellum America was deflation and bank collapses.)

You're correct inasmuch as central banks quicken this reaction, and–when done properly–dampen it. But the fundamental engine is emergent, at least for nominal rates.