Showing posts from August, 2019

Fed's Andolfatto, Powell, and the Secret Goal of the Fed

This article was first published by me on Talkmarkets:

Before discussing Andolfatto, it is perhaps important for people to understand that labor power, unions, shortages, demands for wage increases, are weak following a major credit incident like the Great Recession. But as labor becomes more bold, perhaps one day, it will seek greater pay and power over procuring pay.

However, it does not seem like that behavior is at all imminent. That behavior has existed in the past. But as labor had power in the 50's and 60's, that power is now gone. In fact, labor is very, very weak. That plays against the Fed's desire to keep the Phillips curve in play as discussed below. Following the discussion of Andolfatto, we need to take a look at Ellen Brown's recent article, because it explains much, but not all of Fed behavior. Lastly, we can take a look at the statu…