In late 2002 and early 2003, for example, core PCE measurements were indicating inflation rates that were crossing below the 1 percent "lower boundary." At the time, the economy was expanding in fits and starts. Given the incidence of negative shocks during the prior two years, the Fed was worried about the economy's ability to withstand another one. Determined to get growth going in this potentially deflationary environment, the FOMC adopted an easy policy and promised to keep rates low. A couple of years later, however, after the inflation numbers had undergone a few revisions, we learned that inflation had actually been a half point higher than first thought.

In retrospect, the real fed funds rate turned out to be lower than what was deemed appropriate at the time and was held lower longer that it should have been. In this case, poor data led to a policy action that amplified speculative activity in the housing and other markets. Today, as anybody not from the former planet of Pluto knows, the housing market is undergoing a substantial correction and inflicting real costs to millions of homeowners across the country. It is complicating the task of achieving our monetary objective of creating the conditions for sustainable non-inflationary growth.

Referring to the CPI and PCE price indeces, which constantly disappoint, Fisher says, "The point is ... we need better data." But we've already got much better data -- right in our grasp. This data streams across our Bloomberg screens and CNBC tickers every moment of every day. In real time. The data is called the price of commodities, the value of the dollar, bond yields (somewhat less useful), and most importantly, the price of gold. It's real time market data. No sampling. No revisions. No lags.

Fisher is correct the Fed created the current inflation and that we need "better data." But he doesn't mention that the simple solution is right in front of us.