Macro Musings Blog
No chance. The "better than expected" jobs report has given the Hawks all the ammo they need. The fears of a double dip are gone. The economy will proceed to plod onward, with unemployment in the 9's for all next year. The Fed will do nothing. Ever.What a wonderful world.
DB: Let me put this out there: a sufficiently vigorous government policy (govt spending or direct job creation schemes like FDR) could, nay would, reduce unemployment fairly rapidly. We saw this in WW2. The only reason for not doing this would be either ideological (we hate big govt) or concern that we would get back to wage inflation cost push pressures (so swinging economic power back to labor).Just so we are clear on this.
Growth Hawks must become more active--do not let the Japan Wing of the Fed rule the day. Send this message out: Japan has experimented with tight money for 20 years. It has zero inflation. It has a strong yen. It has also had a GDP growth rate of 0.8 percent (less than France!) in those 20 years, and equity and property markets that have tumbled by 75 percent.What a great future for America, now that we can have zero inflation too! Thanks central bankers--as long as we accomplish the important stuff, like zero inflation. Repeat these themes every chance you get. And Scott Sumner deserves all the recognition in the world.............
") could, nay would, reduce unemployment fairly rapidly. We saw this in WW2."====================First, let's decimate europe and japan and their ability to manufacture