How can there be inflation pressures if wages aren rising?
In an article in TomPaine.com Robert Reich argues that there can’t be inflation pressures if wages aren’t rising. What’s more, the excess world production capacity could portend just the opposite, deflation. From the article: Each generation responds to its own traumatic memory. Ben Bernanke and his Federal Reserve remember the double-digit inflation of the 1970s and are determined to mount a pre-emptive strike. That’s why they’re poised on raising interest rates yet again. Bernanke and company don’t have a direct memory of the trauma that haunted the previous generation, the depression of the 1930s. Each generation, in its determination to avoid the nightmare it does remember, runs the danger of overreacting, and thereby bringing on the opposite trauma. A generation ago, economic policy makers paid too little attention to inflationary forces then building in the American economy. Eventually, Paul Volcker had to break the back of inflation by raising interest rates sky high. That put t
