Monetary Policy and Standards Message Board

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Non-Tech : Monetary Policy and Standards

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To: Hawkmoon who wrote (26)	8/26/1999 2:32:00 PM
From: Frank Sheridan	of 29

Here's an idea I'd like to share with all of you. The Fed uses a number called the "M1" that is an indicator of the total supply of money in the economy. Numbers like the M1, the CPI (Consumer Price Index), and unemployment statistics are the basis upon which the Fed makes decisions about whether to raise or lower interest rates. I would like to propose the creation of a new economic index. Let's call it the "H1" or "Human 1" number. The way it would be calculated would be to take the average number of hours worked per week by workers and multiply it by the average wage (adjusted for inflation/deflation), then divide the result by a standard number that reflects gains or losses in overall productivity. This way we would have a way to compare how "x" amount of effort is paying off for somebody working in an economy. The idea behind this is twofold. One, to show whether working people are enjoying any benefit from increases in productivity. Second, it would give a way to show how much "traction" people are getting in the marketplace, how much actual wealth they are getting ahead for "x" amount of effort. My contention is that overall productivity is increasing at a faster rate than wages are, resulting in people working harder for less overall. However, the current indices given by the Fed and the Treasury don't seem to do a very good job of describing how the average working stiff is doing in our current economy. Gee, you mean the numbers they generate are for the benefit of big business and bankers? What a shock! What say we start putting their feet to the fire and demanding that they start using numbers that reflect how people are actually doing in the economy, instead of offering the usual platitudes about "global competitiveness" and the "new economy". Remember when high wages were considered a sign of how strong our economy was? Now high wages are considered a "competitive disadvantage" in the "new global economy". What twaddle.

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