Things I've Stumbled Across Recently
In yesterday’s post, I linked to some things I find useful and important as we continue to debate the state of our economy and the best way(s) to think about inflation and what to do about it.
Early last week, I wrote about the many things we could be doing to try to bring down inflation. I’m working on a post about inflation and monetary policy—and why rate hikes are the wrong medicine for what ails us—but I won’t have it finished for another day or two.
So I thought I’d share a couple of things you might enjoy in the meantime. The first is a short video by Jim Stanford, who is a Canadian labor economist. There’s quite a lot of overlap in our thinking.
The other is a transcript of the televised address that President Carter delivered to the nation on October 24, 1978. This was Carter’s effort to have a “frank talk” with the American people about inflation and what we—all of us working together—could do to rein it in. When he delivered his remarks, headline CPI inflation was running 8.9 percent.
It’s an interesting read.
The following year, Carter appointed Paul Volcker and, well, the rest is history.
Carter decried as "simplistic and familiar" the notion that a solution to inflation might be "a deliberate recession which would throw millions of people out of work." That's precisely what his Federal Reserve chair Paul Volcker delivered.
What is truly dismaying about Carter's remarks is that Biden could swap out some numbers and dates and deliver the same speech forty-four years later. That's how little mainstream (Democratic) thinking about inflation has progressed in that time.
I believe we do need to raise interest rate to at least 5%. Most of our problems were caused by the Fed artificially keep rates low and accommodating big business and Wall Street with cheap money. All this did was to encourage mal-investments, zombie companies, corporations gross profits, non-productive Wall Street dealings. The end result was a enhanced widening of the wealth gap. Until interest rates are brought up to normal rates ( making money more expensive and to discourage mal-investments,), and give saver’s a good rate of return in save investments, things are only going to get worse. A good Recession is needed to flush out the Mail-investment that is putting money into non-productive ventures. The unemployed could be compensated with a basic income program, until jobs are created again. Dr Raymond Economists.