The Fed needs to decide if it wants to crush the economy to get inflation back to its target rate, famed economist Mohamed El-Erian says

• By the end of the year, the Fed will choose between the economy and its inflation target, Mohamed El-Erian said.
• The central will decide if it can tolerate inflation at 3% or higher — above its 2% target.
• Or the Fed will choose to "crush" the economy to reach its long-standing goal, he told CNBC.

The Federal Reserve needs to make a critical decision at the end of the year that will determine whether the US economy crumbles, according to top economist Mohamed El-Erian.