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Politics : PRESIDENT GEORGE W. BUSH
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To: Neocon who wrote (616426)9/2/2004 7:25:20 PM
From: DuckTapeSunroof   of 769670
 
"perpetual stimulus"

It indicates a structural flaw in the monetary policies of most of the developed world. IMO, monetary policy has been permanently politicized (aimed at political, not economic goals). It has been convincingly argued that the OVERALL growth rate of our economy would have been higher WITHOUT the Fed-engineered 'perpetual stimulus' (which is ultimately self-defeating).

IMO, the more successful strategy would be to DUMP Keynesian policies altogether, and establish steady-state monetary growth --- growing the money supply only as much as GNP increases.

"for some reason, the last 20 years has been a period of remarkably low inflation."

Post WW II period has seen SYSTEMIC inflation imbedded in our economy for the first time in our history as a nation --- which tells us that SOMETHING changed with FDR.

This same period also tracks with the MASSIVE growth of the federal government. (No coincidence.)

As to the last 20 years, I'd argue that the emergence of China in the world markets has resulted in the 'export' of steady deflation in manufactured goods (note: NOT raw materials). This is likely to continue until their currency is allowed to trade freely (where it will significantly appreciate, while the dollar falls)... or until their income levels increase further toward parity with their trading partners.

This is the MAIN factor that has served to moderate inflation in our society --- but it is NOT a state of affairs that will last.
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