David Leonhardt has one of the best and most important news analyses of the year today, explaining how and why the Federal Reserve has contributed to the downturn by persistently overestimating the possibility of growth and inflation. 

One group of Fed officials and watchers worries constantly about the prospect of rising inflation, no matter what the economy is doing. Some of them are haunted by the inflation of the 1970s and worry it may return at any time. Others spend much of their time with bank executives or big investors, who generally have more to lose from high inflation than from high unemployment.
There is no equivalent group — at least not one as influential — that obsesses over unemployment. Instead, the other side of the debate tends to be dominated by moderates, like Ben Bernanke, the Fed chairman, and Mr. Meyer, who sometimes worry about inflation and sometimes about unemployment.
The result is a bias that can distort the Fed’s decision-making. Just look at the last 18 months. Again and again, the inflation worriers, who are known as hawks, warned of an overheated economy. In one speech, a regional Fed president even raised the specter of Weimar Germany.

The inflation hawks, as Leonhardt explains, have proven wrong over and over, yet they show no sign of critical re-examination. The result is monetary policy guarding against a non-existent threat of spiraling inflation, and failing to address the very real crisis of mass unemployment.

It's a vital issue, and part of the problem is that the people who pay the most attention t it tend to be the ones with the most misguided ideas. Matthew Yglesias has a piece for Democracy urging liberals to engage on monetary policy -- read it here -- and he's right.