Monday, February 13, 2017

Making Deaf adder music

Paine said in reply to Sanjait...
"The Great Moderation era Fed has some good aspects but has fundamentally failed to understand how its obsession with keeping inflation from ever even thinking abut going up has suppressed wages and caused labor hysteresis.
I think they assume that all those problems just equilibriate away across the cycle but the reality is not that."
The long run wage rate path is a historical product not the consequence of sublime
Ineluctable dynamic
The optimal path of monetary / credit policy would run hotter
That is until we find our selfs back in the roaring 70's again
Then ?
We face up to socializing the price level path
And deal with the complex consequences of that un confronted historical necessity
Paine said in reply to Paine ...
Ken Galbraith and Jim Tobin among other worthy heads
never stopped knocking on that door
Our un socialized pricing mechanism has fatal externality problems
Any and all "absolute autonomous firm level pricing power"
must be moderated
Harnessed in fact
By an encompassing social mechanism
Harnessed into a relative pricing power only

Paine said in reply to Paine ...
Yes I write too long range but
Wage price spirals are obviously
Macro Policy induced whirl pool
we must someday navigate our way thru and out of this whirl pool
Not simply slow down and let the whirl pool unwind
Or stay slow and avoid the whirl pools all together
Slow slack and wage poor