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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (9238)	7/14/2004 11:46:29 AM
From: zonder	Read Replies (1) \| Respond to of 116555

One of Fed's objectives used to be "full employment", so what? Others were production, increased real income, balanced growth, a balanced Federal budget, adequate productivity growth, proper attention to national priorities, achievement of an improved trade balance and reasonable price stability. You made a statement that the Fed "never", I was simply pointing out Fed "never" what? Here is what I said: the Fed does NOT change interest rates depending on the unemployment levels. It never has, and it never will. Are you going to say that is incorrect, that the Fed actually did or does raise/lower interest rates depending on unemployment figures? If so, you may like to take a look at historical data on tightening periods before you assert that. BTW the Phillips Curve was largely disproved in the 1990s Yeah, well, so is pretty much every other bit of economic theory, once you find one period that goes contrary to the norm predicted by that bit of theory. I haven't looked at this subject for some years and frankly don't feel like reading up on it just because you want to nitpick, but I do remember there are certain conditions of monetary policy that destroys the negative relationship between inflation and unemployment described by the Phillips Curve. That does not mean that it has been 'disproved', especially since it has been otherwise observed to hold for as far back as you care to look. Anyway, I don't care one way or the other about what you think about the Phillips Curve. The subject was whether or not the Fed will change interest rate tightening policy depending on unemployment numbers - i.e. will the Fed shy from increasing rate hikes (their frequency and amount) because of some slightly higher than expected monthly unemployment numbers. If you'd like to say it will, then please go ahead and argue that.