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Politics : Politics for Pros- moderated

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From: LindyBill	12/19/2008 6:39:12 PM
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If Asia keeps buying bonds, that will tend to fend off the inflation. It's worked for the last couple of decades. The Fed's Trade-off Is Inflation Versus Unemployment BEAT THE PRESS BLOG By Dean Baker The Fed doesn't like to ever say that it is deliberately throwing people out of work, nor do economists who support the Fed's actions when it deliberately throws people out of work. Therefore they talk about a trade-off between "growth" and inflation, not unemployment and inflation. The Washington Post is helping to conceal the Fed's actions today in an article where it refers to the view of Greenspan and other Fed members in the 90s that the economy could grow more rapidly without triggering inflation. In fact, the debate was over how low the unemployment rate could fall before inflation began to accelerate. The conventional view at the time was that "non-accelerating inflation rate of unemployment" or NAIRU was near 6.0 percent. The unemployment rate eventually fell to a year-round average of 4.0 percent without any substantial uptick in the inflation rate. It is important to note that the conventional economic theory is called the non-accelerating inflation rate of "unemployment," not the non-accelerating inflation rate of "growth."

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