Saturday, January 9, 2010
Encouraging Zimbabwe Ben
"There's a good chance that unemployment will rise, not fall, over the next year. But even if it does inch down, one has to ask: Why isn't the Fed trying to bring it down faster? ... You can't just look at the 8 million jobs that America has lost since the recession began, because the nation needs to keep adding jobs--more than 100,000 a month--to keep up with a growing population. And that means that we need really big job gains, month after month, if we want to see America return to anything that feels like full employment ... So if we're going to have any real good news, someone has to take additonal responsibility for creating a lot of additonal jobs. And at this point, that someone almost has to be the [Fed]. ... Joseph ... Gagnon urges the Fed to expand credit by buying a further $2 trillion in assets. Such a program could do a lot to promote faster growth, while having hardly any downside. So why isn't the Fed doing it? ... Meanwhile, a significant number of Fed officials, especially at the regional banks, are obsessed with the fear of 1970s-style inflation, which they see lurking just around the bend even though there's not a hint of it in the actual data", my emphasis, Paul Krugman (PK) at the NYT, 11 December 2009, link:
PK resurrects the Phillips Curve here. If Uncle Miltie proved anything it is: inflation is always a monetary phenonenom. PK wants Zimbabwe Ben (ZB) to double the monetary base again, which ZB more than doubled over the last 18 months! If you have US dollar bonds, sell. Imagine, PK holds a Nobel Prize. What a farce. PK, why is the US population growing? Could the US reduce its population growth? Hint: end illegal immigration.