March 10, 2015

RATES ARE USURIOUSLY HIGH:

Partying Like It's 1995 (Paul Krugman, 3/09/15, NY Times)

Six years ago, Paul Ryan, who has since become the chairman of the House Ways and Means Committee and the G.O.P.'s leading voice on matters economic, had an Op-Ed article published in The Times. Under the headline "Thirty Years Later, a Return to Stagflation," he warned that the efforts of the Obama administration and the Federal Reserve to fight the effects of financial crisis would bring back the woes of the 1970s, with both inflation and unemployment high.

True, not all Republicans agreed with his assessment. Many asserted that we were heading for Weimar-style hyperinflation instead.

Needless to say, those warnings proved totally wrong. Soaring inflation never materialized. Job creation was sluggish at first, but more recently has accelerated dramatically. Far from seeing a rerun of that '70s show, what we're now looking at is an economy that in important respects resembles that of the 1990s. [...]

 Recent job gains have brought the Fed to a fork in the road very much like the situation it faced circa 1995. Now, as then, job growth has taken the official unemployment rate down to a level at which, according to conventional wisdom, the economy should be overheating and inflation should be rising. But now, as then, there is no sign of the predicted inflation in the actual data.

The 1880s even more than the 1990s.

Posted by at March 10, 2015 3:39 PM
  

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