Debt as Wealth and Good Monetary Policy
From Jeffrey P. Snider's Debt As Wealth: The Caution of Unfit Past Experience:
"Paper wealth isn't wealth, and government debt isn't "free money." There are consequences to both which their proponents never include in the "prospectus." the current economy appreciates and suffers the absence of actual wealth drowned out by religious devotion to the "aggregate demand" falsity."
DDLA commented: "there will always be unemployed people because the Federal Reserve Bank (FRB) will not allow unemployment to drop below the non-accelerating inflation rate of unemployment (NAIRU) as possible. If unemployment were to drop below the NAIRU, the FRB would begin increasing interest rates to ensure that inflation would not occur, which would raise the unemployment back to the NAIRU. NAIRU is the considered the "natural unemployment rate". Zero unemployment is inflationary and bad for business. So there will always be Americans who cannot find work because keeping just so many millions of Americans unemployed is good monetary policy. "
We Nattered back: NAIRU is problematic in that it assumes wage inflation matches expected price inflation to maintain constant real wages. Thus NAIRU requires inflation to accelerate in order to maintain low unemployment. Unfortunately, real income has decreased; the government has been lying about tame inflation for years; and unemployment spiked during the crisis, raising the NAIRU... there is "Something in This More Than Natural" (Part 1,2,3,4,5) and "Atlas Shrugged Unnaturally"
Back to DDLA's comment: "Zero unemployment is inflationary and bad for business. So there will always be Americans who cannot find work because keeping just so many millions of Americans unemployed is good monetary policy."
Millions unemployed? Good monetary policy? Really?
"Paper wealth isn't wealth, and government debt isn't "free money." There are consequences to both which their proponents never include in the "prospectus." the current economy appreciates and suffers the absence of actual wealth drowned out by religious devotion to the "aggregate demand" falsity."
DDLA commented: "there will always be unemployed people because the Federal Reserve Bank (FRB) will not allow unemployment to drop below the non-accelerating inflation rate of unemployment (NAIRU) as possible. If unemployment were to drop below the NAIRU, the FRB would begin increasing interest rates to ensure that inflation would not occur, which would raise the unemployment back to the NAIRU. NAIRU is the considered the "natural unemployment rate". Zero unemployment is inflationary and bad for business. So there will always be Americans who cannot find work because keeping just so many millions of Americans unemployed is good monetary policy. "
We Nattered back: NAIRU is problematic in that it assumes wage inflation matches expected price inflation to maintain constant real wages. Thus NAIRU requires inflation to accelerate in order to maintain low unemployment. Unfortunately, real income has decreased; the government has been lying about tame inflation for years; and unemployment spiked during the crisis, raising the NAIRU... there is "Something in This More Than Natural" (Part 1,2,3,4,5) and "Atlas Shrugged Unnaturally"
Back to DDLA's comment: "Zero unemployment is inflationary and bad for business. So there will always be Americans who cannot find work because keeping just so many millions of Americans unemployed is good monetary policy."
Millions unemployed? Good monetary policy? Really?
Comments