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Sun Jul 21, 2019, 12:01 PM

Vox article on the four things economists get wrong

https://www.vox.com/policy-and-politics/2019/7/19/20699366/interest-rates-unemployment-globalization-minimum-wage-deficit

They make the most important connection at the end... that these are basically features, not bugs, of the GOP system to oppress the worker and benefit only the rich.

-snip

In a House hearing on monetary policy last week, Federal Reserve Chair Jerome Powell made a telling confession in response to a question from Rep. Alexandria Ocasio-Cortez (D-NY). The topic was the so-called natural rate of unemployment: the idea, believed by many economists and policymakers, that there is a rate at which unemployment could get so low that it could trigger ever-rising inflation.

It’s an idea that has governed decades of monetary policymaking, often prompting the Fed to keep interest rates higher than it should — slowing down the economy in the process — out of fear of accelerating inflation.

Ocasio-Cortez didn’t waste time poking holes at it. She pointed out that the unemployment rate, now 3.7 percent, has fallen well below the Fed’s estimates of the natural rate, which it forecast at 5.4 percent in 2014 and 4.2 percent today. And yet, she noted, “inflation is no higher today than it was five years ago. Given these facts, do you think it’s possible that the Fed’s estimates of the lowest sustainable unemployment rate may have been too high?”

Powell’s response, to his credit, was as simple and direct as you’ll ever hear from a central banker: “Absolutely.” He elaborated: “I think we’ve learned that ... this is something you can’t identify directly. I think we’ve learned that it’s lower than we thought, substantially lower than we thought in the past.”

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Reply Vox article on the four things economists get wrong (Original post)
Takket Jul 21 OP
SWBTATTReg Jul 21 #1
Wounded Bear Jul 21 #2
KG Jul 21 #3

Response to Takket (Original post)

Sun Jul 21, 2019, 12:07 PM

1. This goes to show you that fancy pants economists and politicians don't truly know what...

makes the economy really tick, e.g., the 2017 Tax Cuts and Jobs bill, which promised literally a turkey in every American's cooking pot failed miserably in delivering any significant tax breaks to the average American.

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Response to Takket (Original post)

Sun Jul 21, 2019, 12:15 PM

2. Economics is not hard science...

It is a social science.

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Response to Takket (Original post)

Sun Jul 21, 2019, 12:36 PM

3. there goes that pesky AOC again.

asking pertinent questions and all.

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