Thomas Palley
The Federal Reserve has now openly adopted a two percent inflation target, with both Chairman Bernanke and the Federal Open Market Committee publicly committing to holding inflation at that level. Though not a problem today, this two per cent target represents a policy trap that will undercut the possibility of future wage increases despite on-going productivity growth. That promises to aggravate existing problems of income inequality and demand shortage.
The Fed’s new policy is tactically and analytically flawed. Tactically, at this time of global economic weakness, the Fed should be advocating policies that promote rising wages rather than focusing on inflation targets. Analytically, its inflation target is too low and will inflict significant future economic harm.
Read the rest here or here.
Subscribe to:
Post Comments (Atom)
-
There are Gold Bugs and there are Bitcoin Bugs. They all oppose fiat money (hate the Fed and other monetary authorities) and follow some s... -
Teaching on the capital debates this and last week. So here are some thoughts, based on my class notes and the required readings (see below)... -
By Sergio Cesaratto (Guest Blogger) “The fact that individual countries no longer have their own currencies and central banks will put n...
No comments:
Post a Comment