Speaking recently at a conference, venture capitalist Vinod Khosla discussed the impact that technology will have on an evolving workforce.

"I think it's likely over the next 40 to 50 years that more than 50 percent of all jobs that exist will get displaced," Khosla added.

Which is not something he takes lightly. If society thinks economic disparity is a problem now, he suggested that we haven't seen anything yet.

Even if monetary policy could easily pop bubbles, the Fed is mandated to promote maximum employment. With the current US labour market, employment is anything but maximum. The unemployment rate has dropped considerably from its high of 10 per cent to its current rate of 6.3 per cent. But this decrease is largely due to workers dropping out of the labor force.

The share of Americans with a job, about 59 per cent, is still four percentage points below its pre-recession level. So will these discouraged workers, particularly the long-term unemployed, ever rejoin the labor market? Should we assume they are forever lost?

One way to answer these questions is to look at the growth in wages. If wage inflation is high or rising, then the labor market is tight and these discouraged workers are locked out. Alan Kreuger, the Princeton University economist and former Chair of President Obama’s Council of Economic Advisers, has done research supporting this view. On the other hand, if wage inflation is low, then the labor market has considerable slack. And therefore, the Fed can continue to pursue expansionary monetary policy. Chair Yellen has taken this view in opposition to Krueger, seeing the long-term unemployed as once-and-future members of the labor force.

During the period of declining unemployment rates and workers dropping out of the labor force, wage inflation has been muted.

The consequences of tightening policy too soon may be severe. Locking discouraged workers out of the labor market would reduce long-run economic growth and cause huge personal harms to these workers.

Research also finds that tight monetary policy also increases income and consumption inequality.

The Fed, along with other policymakers, have stopped the leaking holes of the American economy. But there’s still quite a bit of water left in the boat. Keeping the water on board will not only damage the cargo, but keep the boat from going full speed. For lack of a better term, the Fed needs to go back to bailing out the boat or risk the consequences for the real economy.