Fears that the Federal Reserve's monetary policy will lead to inflation are unjustified, says MIT economist Simon Johnson.

But the fears about "too big to fail" banks aren't, he told PBS.

"How do we get inflation when the economy remains soft — and unemployment relatively high?" Johnson said. "The idea that bond buying would destabilize inflation expectations has been proved completely incorrect."

Editor’s Note: Obama Donor Banned This Message (Shocking)

The economy grew at an average rate of 1.4 percent a quarter in the first half of the year. And consumer prices gained 1.8 percent in the 12 months through June.

"There is no sign that the Fed has lost control over monetary policy or that it would be unwilling to recognize signs of accelerating inflation should those materialize," Johnson explained.

Moral hazard is the real problem, he noted. That's the idea that financial institutions are willing to take large risks, because they believe the government will bail them out if they fail.

"Who is willing to address the messed up incentives that result from some financial institutions being too big to fail (or jail)?" Johnson asked.

"Financial regulation — and the lack of progress on this dimension — remains our Achilles' heel."

Marcus Stanley, policy director of Americans for Financial Reform, also sees financial regulation as a key issue.

Indeed, the "central regulatory role of the Fed, especially post-Dodd Frank, should be a key consideration in the appointment of the next Federal Reserve chairman," he wrote in U.S. News & World Report.

"In appointing the next leader of the Federal Reserve, President Obama will also be appointing the person who should be the lead watchdog of Wall Street."

Editor’s Note: Obama Donor Banned This Message (Shocking)