It’s a shame the Federal Reserve still uses an ideological template (Phillips curve) to arrogate to itself a power that was discarded by Volcker and Reagan. What both men proved was that there really NEVER was a trade off between inflation & unemployment. It’s really very disturbing to find entire institutions (higher education & the Federal Reserve) completely devoted to keeping it alive. Hayek’s writings on a ‘Fatal Conceit’ are ringing true.
What did the end of the Phillips curve usher in that is ignored today?
A policy mix. Something any competent executive with minimum experience could field. Instead, what we’ve got is the uber-technocracy of positivism, something a Comte or Descarte understood. This myopia of competence is really destroying the moral fabric of our civilization. There are alternatives, but I’ll leave that for another day.
The labor departments jobless numbers have come out, and they look good for the short term. However, the adults in the room know better, while U6 has fallen, the employment population ratio (the percentage of the working age population with a job) is holding steady, trending up from 63% in 2006 to 59% today.
Average hourly earnings are up a penny. Even though GDP is up, CPI is as well, eating away at income.
Pro-growth policy. Permit citizens to get to equity/capital formation and the Great Recession is OVER.
Instead, what we’ve got is politically allocated lines of credit, and that makes the chatter class and technocrats happy.
Hayek spent his life writing, advising against the very pernicious impact we’re now in. The lesson here is simple: centralized, monolithic institutions that are backward looking, never did provide leadership. We’re responsible for whom we elect.