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The Fed economic policies of strict inflation control have had a big part in holding down wages for working people. We all know when there is very strong job g

The Fed economic policies of strict inflation control have had a big part in holding down wages for working people. We all know when there is very strong job growth the Fed increases interest rates to slow the economy. This is done to limit inflation but it's executed at the very point when the "working person" would otherwise have the chance to get ahead. If interest rates were held lower longer strong job growth would elevate competition for labor... thereby increasing wages. This strategy caries with it a more pronounced risk of a spike in inflation but I would suggest that risk is worth it. If you look at the stagnation in real wages it starts around 1980, not coincidentally 1 year into Paul Volcker's term as fed chairman (whose clear mandate and legacy was controlling inflation at any cost).

mjevans 10y ago
While I agree that limiting inflation seems to be a laudable goal for economic stability, I disagree that enough is being done about it. Inflation has gone /rampantly/ uncorrected for those who are able to make the most prominent political contributions. This is evident in the widening growth gap mentioned in this very article.
ceras 10y ago
Anyone interested in this idea should check out the Fed Up campaign: http://whatrecovery.org http://whatrecovery.org
poof131 10y ago
Totally disagree. We’re sitting at almost zero percent interest rates because the fed can’t take their foot off the pedal. More isn’t going to help bring back the middle class. Volker broke the stagflation of the 70s and is probably the only decent chairman. Bad trade deals, runaway education and health costs, regressive taxes, foreign wars, etc. have done more to decimate the middle class than interest rates being too high. If anything, the fed has helped accelerate / fund much of this mess with ridiculously low interest rates for decades. Certainly it will hurt when rates go up, but it hurts to pay off your credit cards too. Cheap money funds malinvestment, flows to the politically connected, and aggravates income inequality. It’s just tough to notice. You may get a raise at work but don’t realize the bosses mansion/stock just appreciated 100 times more than your raise. You feel good but your ability to purchase things decreased.
chrisabrams 10y ago
Yikes the fed from the 1970s called and wants you to come join them!!!!! Seriously, low interest rates for too long back then made inflation almost hit 20%. I'm sure that's going to help the working class.

mjevans 10y ago

While I agree that limiting inflation seems to be a laudable goal for economic stability, I disagree that enough is being done about it. Inflation has gone /rampantly/ uncorrected for those who are able to make the most prominent political contributions. This is evident in the widening growth gap mentioned in this very article.

ceras 10y ago

Anyone interested in this idea should check out the Fed Up campaign: http://whatrecovery.org http://whatrecovery.org

poof131 10y ago

Totally disagree. We’re sitting at almost zero percent interest rates because the fed can’t take their foot off the pedal. More isn’t going to help bring back the middle class. Volker broke the stagflation of the 70s and is probably the only decent chairman. Bad trade deals, runaway education and health costs, regressive taxes, foreign wars, etc. have done more to decimate the middle class than interest rates being too high. If anything, the fed has helped accelerate / fund much of this mess with ridiculously low interest rates for decades. Certainly it will hurt when rates go up, but it hurts to pay off your credit cards too. Cheap money funds malinvestment, flows to the politically connected, and aggravates income inequality. It’s just tough to notice. You may get a raise at work but don’t realize the bosses mansion/stock just appreciated 100 times more than your raise. You feel good but your ability to purchase things decreased.

chrisabrams 10y ago

Yikes the fed from the 1970s called and wants you to come join them!!!!! Seriously, low interest rates for too long back then made inflation almost hit 20%. I'm sure that's going to help the working class.