The Cleveland Fed inflation estimates, based on financial market data including the interest rate spread between ordinary and inflation-protected Treasury bonds, show expected inflation of 1.4 percent per year over the next ten years. So, if Shlaes knows about an inflation bomb that the young guns on Wall Street can’t see, she has the opportunity to go make a ton of money in the bond markets.

Inflation isn’t nearly as mysterious as Shlaes makes it out to be. Milton Friedman is on point here: “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” If inflation starts to get out of control, all the Fed has to do is contract the money supply.

The Atlantic’s Matthew O’Brien takes down another Shlaes column arguing that Bernanke is violating Milton Friedman’s precepts by printing money to combat deflation:

For example, Bloomberg View’s Amity Shlaes argues that Friedman would counsel Bernanke not to combat deflation and depression today. Actually, she goes further, claiming that Bernanke has essentially betrayed Friedman’s legacy by embarking on quantitative easing. This is like saying that Paul Krugman has betrayed Keynes’ legacy by advocating gobs of government spending.

And O’Brien shows that Friedman argued that Japan should embark on the very same securities purchases Bernanke has.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at