STALKING THE FED….New Fed chairman Ben Bernanke testified before Congress today, and Max Sawicky is not happy that he seemingly cares only about inflation to the exclusion of everything else:
Wages were hardly mentioned. (Rep. Harold Ford, Democratic champion, at one point referred to wages being “under control.” Whew! Thank god for that.) We are told that cost pressures are worsening and monetary tightening is on the agenda. This is code for suppressing possible wage gains and preventing dangerously low levels of unemployment (sic). Rep. Ford will be happy, but you will not.
It’s worth noting, as Max does in passing, that inflation is not the only thing the Fed is supposed to be concerned about ? although an awful lot of reporters seem to believe this. Rather, its statutory mission is to conduct monetary policy “in pursuit of maximum employment, stable prices, and moderate long-term interest rates.” Maximum employment, of course, would have the happy effect of raising median wages, which for most of us would be a good thing indeed. Now we just need to get the Fed to agree.