Getting Workers’ Minds Right at the Fed
Sunday, April 13th, 2008Regular commenter quasibill, on the LeftLibertarian2 list, linked to an excellent article on Federal Reserve policy and inflation. Here’s the money quote (no pun intended):
A popular misconception is that inflation cannot occur in an economy without wage inflation to transmit prices into all-goods prices. Indeed the Fed has waged war on wages since the early 1980s so this point of confusion is understandable…. But wage inflation is but one of a long list of factors that can create an inflation spiral.
Labor discipline, in fact, has been a central objective of Federal Reserve policy since Volcker’s recession in the early ’80s.