The Fed’s good news isn’t good for you
“The good news is that the Fed’s probably right when it says that we’re not headed for a replay of the stagflation of the 1970s,” says Fortune’s Colin Barr in CNNMoney.com. The bad news is that the Fed’s probably also right that “Americans are going to be feeling poorer” for the foreseeable future. It hopes it’s right about that, anyways. To prevent a return of the “dreaded wage-price spiral,” the Fed is betting that the labor market is weak enough that “pinched workers” aren’t in any shape to demand a raise. Stagnant wages should be good for keeping down inflation, but it's a good bet it won’t feel good for us “wage slaves.”
Greenspan’s long goodbye
You’d think that at 82, with a fat bank account, “Alan Greenspan might be spending lazy summer days fly-fishing in Scotland,” says Steven Pearlstein in The Washington Post, but he “just can’t get the hang of this retirement thing.” Instead he’s writing op-eds and giving interviews to “buff up his legacy in the face of rather compelling evidence that . . . well, that he screwed up big time.” The “heart of the Greenspan Fallacy” is a belief that booms and busts are inevitable, that we should learn to live with them, not try to regulate them away. This is all fine and good for mathematics, but “economics is a social science,” and he doesn’t seem to grasp that people will sacrifice a little growth for some “security, predictability, and fairness.”
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