November 27, 2005

JUST ANOTHER ONE OF THE DEFLATIONARY FORCES:

Global Work Force Helps Fed on Inflation (Martin Crutsinger, 11/27/05, AP)

While Alan Greenspan has won praise for his successful 18-year battle to keep inflation under control, he's the first to say he's had a lot of help. Among those most responsible are tens of millions of workers in China, India and Eastern Europe.

Adding all those workers to the global economy has made the Federal Reserve's inflation-fighting job easier by increasing competition. That has helped hold down labor costs -- the biggest single expense for employers -- and, as a result, prices.

Posted by Orrin Judd at November 27, 2005 7:15 PM
Comments

Now I'm confused. I thought unemployment in the former East Germany was about 25%? What about Romania, Hungary, Slovakia, the former Yugoslavia, Bulgaria, the Ukraine, Belarus, and Moldova?

Has AP just decreed that their economies are 'fully employed'? If so, then the US must be Shangri-La, but I missed that story, too.

Posted by: ratbert at November 27, 2005 8:21 PM

Increases in prices and labor costs do not cause inflation.

Posted by: carter at November 27, 2005 8:35 PM
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