Well, not quite, but it was worth it for the headline. In this post, John Taylor cites recent work by Erceg and Levin at the Board of Governors, pointing out that headine unemployment rates are a bad indicator of true labour market slack in the US, because the contraction has discouraged a large share of the labour force from even trying to look for work. So true unemployment (or under-employment) is much worse than headline unemployment. [One reason why it's helpful to use the property of sticky price models, if you believe in them, that the inflation rate can also tell you about the amount of slack in the economy]. John Taylor does not, however, draw the conclusion that, after all, the loose monetary policy he has been criticising is warranted. Why not, I cannot fathom. The output gap is the unobserveable variable he told central banks to feed into their interest rate rules in 1993. Surely any sensible model of that unobserveable would conclude that the output gap was greater, having formally digested the result that participation was highly cyclical? In which case policy should be looser than previously thought? (If not, what procedure