Kohn Says Economy Operating "Well Below" Potential

This article is about the observations and predictions of the Federal Reserve Vice Chair, Donald Kohn. First of all, he says that interest rates are likely to stay low for an longer period of time; however, rates will have to be raised eventually. The key is when and how fast rates should rise, because there is a great fear of large inflation. Kohn believes that the economy is not being as productive as it could, given the unemployment rate, low prices, decreasing wages, and unused capacity. The way to achieve this higher productivity is through government/fiscal policy, and their ability to lower the debt volume.
I think that since expected inflation leads to higher interest rates, the case may be that interest rates will rise anyways. Also, I agree that the overall confidence of consumers and business is hampering the productivity. The government may have to keep trying to provide incentives to invest and produce more.