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WRT your first graph: the mandate of the fed is to "maximize employment". So no. There are lots of reasons low-wage workers are at a disadvantage in our politi

WRT your first graph: the mandate of the fed is to "maximize employment". So no. There are lots of reasons low-wage workers are at a disadvantage in our political and economic system, but central banks are not one of them.

toomuchtodo 8y ago
The Federal Reserve manages inflation through credit. Inflation is used to reduce the value of fiat. Reducing the value of fiat requires you be able to invest to overcome inflation, or work more to recoup what's been artificially devalued. Ergo, the Federal Reserve is economically coercing people to work who might otherwise not need to, or who might prefer to work less. "Maximizing employment". This would be fine with sane labor protections (a reasonable living minimum wage, minimum PTO/vacation/sick days, maternity/paternity leave, etc), but is disastrous without them. This is what happens when you maximize for employment and GDP versus quality of life.
areyouseriousxx 8y ago
> In setting monetary policy, the Committee seeks to mitigate deviations of inflation from its longer-run goal and deviations of employment from the Committee's assessments of its maximum level. These objectives are generally complementary. However, under circumstances in which the Committee judges that the objectives are not complementary, it follows a balanced approach in promoting them, taking into account the magnitude of the deviations and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with its mandate. [1] Employment is maximized within the limitations of excessive inflation and vice versa. It is well established that a scarcity of workers has a direct, measurable effect on inflation. Therefore, one could conclude that it would be impossible for the Fedral Reserve to allow for a significant scarcity of workers, which is required for low wage workers to have meaningful leverage in negotiations, as it would voilate the mandate to maintain stable prices(inflation) as set forth in the Federal Reserve Act of 1913 [2] To elaborate on this a bit. This it not so much a direct action of the Federal Reserve to create a scarcity of workers, as much as it is a result of a scarcity of workers causing inflation. That inflation would force the Fed to raise interest rates. Those rate hikes would slow the economy and would result in there no longer being a scarcity of workers. The balance of the Federal Reserves two manadates, maximum employment and stable prices, results in about 4.25% unemployment(a slight scarcity) and 2% inflation(stable enough prices).[3] That is our current comporomise between stable prices and maximum employment. [1] https://www.federalreserve.gov/faqs/money_12848.htm https://www.federalreserve.gov/faqs/money_12848.htm [2] https://en.wikipedia.org/wiki/Federal_Reserve_Act https://en.wikipedia.org/wiki/Federal_Reserve_Act [3] https://www.chicagofed.org/research/dual-mandate/dual-mandate https://www.chicagofed.org/research/dual-mandate/dual-mandat...
- jdietrich 8y ago
  See also: https://en.wikipedia.org/wiki/NAIRU https://en.wikipedia.org/wiki/NAIRU

toomuchtodo 8y ago

The Federal Reserve manages inflation through credit. Inflation is used to reduce the value of fiat. Reducing the value of fiat requires you be able to invest to overcome inflation, or work more to recoup what's been artificially devalued. Ergo, the Federal Reserve is economically coercing people to work who might otherwise not need to, or who might prefer to work less. "Maximizing employment". This would be fine with sane labor protections (a reasonable living minimum wage, minimum PTO/vacation/sick days, maternity/paternity leave, etc), but is disastrous without them. This is what happens when you maximize for employment and GDP versus quality of life.

areyouseriousxx 8y ago

> In setting monetary policy, the Committee seeks to mitigate deviations of inflation from its longer-run goal and deviations of employment from the Committee's assessments of its maximum level. These objectives are generally complementary. However, under circumstances in which the Committee judges that the objectives are not complementary, it follows a balanced approach in promoting them, taking into account the magnitude of the deviations and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with its mandate. [1] Employment is maximized within the limitations of excessive inflation and vice versa. It is well established that a scarcity of workers has a direct, measurable effect on inflation. Therefore, one could conclude that it would be impossible for the Fedral Reserve to allow for a significant scarcity of workers, which is required for low wage workers to have meaningful leverage in negotiations, as it would voilate the mandate to maintain stable prices(inflation) as set forth in the Federal Reserve Act of 1913 [2] To elaborate on this a bit. This it not so much a direct action of the Federal Reserve to create a scarcity of workers, as much as it is a result of a scarcity of workers causing inflation. That inflation would force the Fed to raise interest rates. Those rate hikes would slow the economy and would result in there no longer being a scarcity of workers. The balance of the Federal Reserves two manadates, maximum employment and stable prices, results in about 4.25% unemployment(a slight scarcity) and 2% inflation(stable enough prices).[3] That is our current comporomise between stable prices and maximum employment. [1] https://www.federalreserve.gov/faqs/money_12848.htm https://www.federalreserve.gov/faqs/money_12848.htm [2] https://en.wikipedia.org/wiki/Federal_Reserve_Act https://en.wikipedia.org/wiki/Federal_Reserve_Act [3] https://www.chicagofed.org/research/dual-mandate/dual-mandate https://www.chicagofed.org/research/dual-mandate/dual-mandat...

jdietrich 8y ago
See also: https://en.wikipedia.org/wiki/NAIRU https://en.wikipedia.org/wiki/NAIRU