Matt Yglesias is 100% correct here. This is one of my favorite graphs when I read conservatives like Paul Ryan, Tim Pawlenty, and Newt Gingrich blasting Bernanke for creating "runaway inflation" and longing for the monetary policy we had in the Reagan (Paul Volcker) years. The graph shows the inflation rate over the last 30 years:
Reagan mythology takes many forms...
The valid conservative (monetarist) critique of Bernanke is twofold:
1. Lack of any explicit target-- be it inflation target, NGDP target, etc. (see the bottom of this post) The "let's try X and see what happens" method isn't helpful because, as someone else put it, it's like revving the engine on a ship without plotting a course-- you need to do both.
2. Allowing NGDP and inflation expectations to fall during the recession. The Fed was focused on the spike in gasoline and commodity prices (see point #10) and pursuing too-tight monetary policy in 2008 instead of seeing the overall picture. If it had an implicit target of core CPI inflation just under 2%, it didn't do a good job of hitting it--at all. See Point #1.
But "Bernanke is creating runaway inflation" is not a valid critique.