mscbuck
"You Would Have Been BALEETED..."
Posts: 3,897
It's funny how that is so obvious, yet people miss it completely. It just shows that people have no idea what inflation or deflation really mean when it comes to the demand for money holdings.
In fact, in this current situation, mild inflation would be super preferred to get the economy going. Most of the debt you hold is in nominal figures, so mild inflation actually makes it easier to pay off debt.
Inflation is not bad, people, at least not by default. Hyperinflation is bad. A little bit of inflation here and there is not a bad thing, and given the current state of the economy where inflation is hovering around 2% but have very high unemployment, we could use a little. Money is not "easy" right now, and treasury bill yields and mortgage rates will tell you that. That's what makes Rick Perry's "The Fed is treasonous" claim even more laughable.
We need a little inflation right now. We could use a 4% NGDP growth target. More and more economists are coming around to the idea of targeting NGDP growth and using monetary policy and fiscal policy to accommodate, rather than trying to target inflation through interest rates. NGDP growth is an incredibly sound predictor of where the economy is going. It was one of the first signs of the deepening of the crisis.
Again, the US does have welfare, and it does have a very generous unemployment package...A much better idea than forcing people into farming is probably to train them with computers, or skills that are actually IN DEMAND today. I'd rather we make unemployment have some sort of mandatory skill training that you have to go through than just to force people into random sectors. Structural employment is screwing over the 90s generation, and they are trying to catch up.
And Alco, the scenario you play out with minimum wage may give America an ABSOLUTE advantage in producing such unskilled-labor goods, but that does not mean that we would shift our production into that good. Maybe a little, but not as much as you think. There probably would still be countries with a comparative advantage in that good, and it would be best to let them make it and we stick to what we do (again, assuming rather free trade).
"His Will Was Set, And Only Death Would Break It"
"None knows what the new day shall bring him"