The Fed Should Let Middle-Class Workers Prosper
The Fed’s Phillips curve model isn’t working anyway. The unemployment rate has come down to 5 percent and the inflation rate is near zero. According the Fed, inflation ought to be 4 or 5 percent. It’s not. The dollar is up. Oil and commodities are down. There is no global rise of inflation. And there’s a strong worldwide demand for greenbacks. This is good, not bad, according to veteran free-market economist Alan Reynolds. He’s right. What causes inflation? Bad money. Excess money. Too much money chasing too few goods. How do we measure this? We use market-price indicators, such as commodities, the dollar exchange rate, and Treasury inflation expectations.
.. Supply-side policies to reduce burdensome taxes and regulations will grow the economy and reward workers. That’s what’s missing from the picture. The Fed should wise up and stick to price stability rather than slamming workers. And China should let markets determine currency and stock prices instead of the central planners.
Then we can get bullish again.