Ruth, of course, was the greatest home-run hitter of his generation. His career record of 714 home runs lasted for 39 years until it was broken by Hank Aaron. Bonds set the single season mark for home runs in 2001 and may break both Ruth and Aaron's career marks.

Unlike Aaron, however, Bonds is no folk hero. Many fans suspect that steroid use has been a primary factor in his success. He may have used modern technology to achieve things even Ruth couldn't have.

It's in this regard that Bernanke, nominated by President George W. Bush to succeed Greenspan, is like Bonds. He has supported the adoption of inflation targets by the Federal Reserve. Some of the best work at the frontier of economics research has constructed fancy, high-tech economic models, and demonstrated that inflation targets can significantly improve the effectiveness of monetary policy.

It's not a stretch at all to think that Bernanke and these modern technologies can outperform Greenspan. Fortunately for Bernanke, one can do so in monetary policy and not be considered a cheater.

The Problem

To understand why inflation targeting may be necessary now, consider how the world has changed. Back in the 1970s, inflation twice rose higher than 10 percent, and every market participant knew that the Fed wanted inflation to be lower.

Now, core inflation has been quite low for some time, dipping to a year-over-year rate of only 2 percent in the Labor Department's latest consumer price index report on Oct. 14. Market participants must naturally wonder whether the Fed thinks inflation should be lower still, whether it could comfortably be a tad higher, or whether it's just right.

This uncertainty is a big deal, and is quite unnecessary. The Fed could easily tell the world the level of inflation it thinks is ideal.

Such an announcement wouldn't necessarily constrain its actions. Even if its target were 2 percent today, policy makers might still tighten to avoid an increase down the road. But it would allow markets to have a better sense of where the Fed is going.

The Solution

Would a target matter? One recent study found some significant differences between countries that practice inflation targeting, and those that don't.

For example, private-sector inflation forecasts tend to show more agreement with one another in inflation-targeting countries than in the U.S. Such disagreement about future inflation is a good measure of the extra risk added to the economy because the Fed isn't transparent enough.

How big a difference would the adoption of a target really make? Economists Marc Giannoni and Michael Woodford of Columbia University recently made an ingenious effort to find out. They constructed a fancy economic model, and plugged in optimal monetary policy rules, including inflation targets.

They then ran recent economic history through their model, kind of like replaying history with a really advanced version of the computer game Sim City.

Targeting Will Come

Looking back from 2002, they found the monetary policy that resulted from the optimal inflation-targeting rule looked very much like the monetary policy we had, with a small exception. Relative to the optimal rule, actual monetary policy was ``somewhat too loose in the 1990s'' and ``consistently too tight in the last nine quarters of our sample.'' The differences weren't huge.

With the benefit of hindsight, many observers agree with the model's findings. Giannoni and Woodford's work suggests the Fed may have known that ahead of time if it had adopted Bernanke's suggestion to target inflation.

Bernanke wouldn't, of course, remove the discretion of policy makers and advocate that some mechanical model replace the terrific system we have. But inflation targets would increase transparency, reduce uncertainties, and possibly improve the cyclical performance of the Fed with little downside risk.

My guess is that Bernanke will devote significant staff resources to further study of these issues, and that the advantages of his approach will become overwhelming enough in the next few years that the Fed will adopt an inflation target. When it does, it will be good news.

Kevin A. Hassett is a resident scholar and director of economic policy studies at AEI.