Looking to blame someone for stagnant wages? Look to the Fed.

America's fear of inflation is getting self-destructive

Rising prices does not always lead to rising wages.
(Image credit: John Holcroft/Ikon Images/Corbis)

Everyone who's remotely concerned with economics is fretting about when the Fed will hike interest rates — not "whether," but "when." Federal Reserve Chair Janet Yellen recently hinted that "when" could be "soon," jolting markets. All of this is a bit surreal.

The Fed's job is, on the whole, pretty simple: Try to keep a balance in the economy between employment and inflation. If the economy is overheating, if there's more money to go around than there are goods and services to be bought, that will show up as increased prices — a.k.a. inflation. If the economy is below capacity, there will be stagnation and no inflation. Well, where are we? Inflation in the U.S. is at an all-time low. And while unemployment is low, so is growth, and the drop in unemployment has as much to do with people dropping out of the workforce as with economy recovery. There's simply too many unemployed people to raise rates yet.

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