Currently a level of unemployment of 7 percent or more seems to be required to keep inflation from accelerating, a level quite unacceptable as a permanent situation.
Sentiment: NEGATIVE
I'm just opposed to a pure inflation-only mandate in which the only thing a central bank cares about is inflation and not employment.
If unemployment could be brought down to say 2 percent at the cost of an assured steady rate of inflation of 10 percent per year, or even 20 percent, this would be a good bargain.
Certainly, 9 percent unemployment and very slow growth is not a good situation.
It was gradually learned that acceptance of a somewhat higher inflation rate would not really bring somewhat higher employment.
When people begin anticipating inflation, it doesn't do you any good anymore, because any benefit of inflation comes from the fact that you do better than you thought you were going to do.
Avoiding inflation is not an absolute imperative but rather is one of a number of conflicting goals that we must pursue and that we may often have to compromise.
But clearly an economy that's growing and expanding like this one - and it certainly is doing that with high GDP output, employment numbers strong, capacity utilization strong - that's an environment in which the Fed needs to continually be alert to early signs of inflation.
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.
Well, I think the global economy is in the position for continuing good growth with inflation well in check.
It takes about two and a half percent growth just to keep unemployment stable.