Yesterday bond prices dropped on speculation that the new candidate for Fed chairman, Ben Bernanke, would be soft on inflation. We think the market was getting ahead of itself. After all, before you surmise that someone will be “soft” or “hard” on inflation, first you have to agree upon what inflation is. And once you acknowledge the importance of that last question, then you probably want to welcome Mr. Bernanke.

That’s because he has an answer: the upward movement of the core Consumer Price Index, or other measures of core prices. Over the years, Mr. Bernanke has chaired the economics department at Princeton, served as a Fed governor and led President Bush’s Council of Economic Advisers. Throughout the period, he has emphasized the importance of inflation-targeting, a monetary policy that looks at the CPI and inflationary expectations. Then it decides whether to use its tools to move interest rates up or down. In a regime that targets inflation, central bankers set a specific target rate of price increases – say, 2% a year – and also a transparent time frame during which they hope to sustain that rate. Inflation-targeting has been tried with good success by the Bank of England and central banks elsewhere. It is different from the old monetarist’s effort to measure inflation by looking at “the Ms,” aggregate measures of money supply. It is also different from a “price rule” regime that looks at so-called market-based indicators – not CPI components but commodities or currencies whose prices change all day long, and need to be stable in a global economy.

The point here is not that inflation targeting is the ideal regime. (Our favorite is a price-rule regime, which looks forward more, but we’ll get into that another time). It is that it is a regime. America’s monetary laws are vague, granting to the Fed chairmen a degree of discretion that other central banks find disconcerting. It has been the country’s good fortune to have two great Fed helmsmen, Paul Volcker and Alan Greenspan. Mr. Volcker saved the nation, albeit only with great ruction, from the consequences of his predecessors’ decision to exercise their discretion and inflate. Both Messrs. Volcker and Greenspan chose to ignore Keynesian exhortations that they “inflate to create jobs.” The result has been the relatively stable economy and growth of modern adulthood.

But it could have been otherwise. For the license to repeat past errors remains – as well as the political pressure that comes with such license. Not an hour after the news of the Bernanke choice Charles Schumer’s office issued a statement asking: “Will Bernanke adopt the Greenspan model of flexibility”? By “flexibility,” Mr. Schumer means openness to the blandishments of a certain senator from New York.

Mr. Bernanke is a cool customer; he is not likely to be quite the relationship builder that Chairman Greenspan was. That’s fine. A Fed with less personality and more predictability would spare us all some mortgage nightmares. America favors the rule of law over the rule of individual men. Let that doctrine hold for monetary policy as well.