>The reality is the free ride on inflation can't last forever and if the Fed fails to predict the future it can get pretty grim. >Similarly, there are a number of bubble like portents such as resource prices that are showing an excess of capital is being malinvested.

The thing is it's really easy for the Fed to slow the economy down, it's a lot harder to get it started again. So it makes sense for them to wait until they actually start seeing inflation before they decide to raise rates.

It's hard to say whether the mal-investment is due to the current monetary policy or the lack of better investment options in a bad economy.

FWIW, the participation rate for the wider population shows a more significant drop around 2009:

https://research.stlouisfed.org/fred2/series/CIVPART

This might be due to early retirement, or more young people not finding work. I don't research this data much.