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Although most Americans apparently loathe inflation, Yale economists have argued that a little inflation may be necessary to grease the wheels of the labor market and enable efficiency-enhancing changes in relative pay to occur without requiring nominal wage cuts by workers.

In addition to joblessness, of course, by the working of supply and demand, when you have a larger number of people unemployed, wages do not rise at the normal level, so that we had last year a drop in real wages.

It was gradually learned that acceptance of a somewhat higher inflation rate would not really bring somewhat higher employment.

Inflation was driven by higher labor costs, not higher goods costs. Frankly, I'd love to see a little bit of that. Because I'd love to pay people more. I'd love to see rising wages for everybody.

When we lift the wage floor, it not only betters the lives of those whose wages are directly affected, it also lifts the economy as a whole.

The poor pay more, and that's one of the reasons people get trapped at the bottom of the economic ladder.

To be sure, faster growth in nominal labor compensation does not necessarily portend higher inflation.

Everybody feels better about himself, his community, and his country if employers are paying workers well. Economics, though, teaches that if every employer is pressured to raise wages, some labor will be priced out of the market.

We know that inflation distorts economic behavior. In the 1970s, a combination of high tax rates and inflation prompted investors to flee production in favor of protection.