"Fiscal policymakers and businesses have an essential role to play too."
I wonder if this kind of statement is not really just meant to express concern that Fed policy is unnecessarily tight at the time, not a recommendation for business or fiscal policy makers to do anything they should not be doing anyway.
No, there are steps that fiscal policymakers can take to address the causes of supply-side inflation like funding the construction of more housing, subsidizing childcare and universal pre-K so parents work, or energy policy to protect us from swings in global prices. None of these are short term fixes but if we continue to rely on the Fed, then yes, the policy is too tight and workers pay for it. As for businesses, the short-termism of shareholder capitalism has created vulnerabilities like fragile supply chains and other capital investments. It is the Fed's job to achieve maximum employment and stable prices, but the idea that it should do it all is misplaced and weakens our economy.
I do not disagree in substance, probably just semantics. [And you are the author and get to chose the semantics you think is best. :)]
My very narrow point is that it seems to me the things you mention should be done (or not if one disagrees in substance) regardless of the state of inflation or of Fed policy. And vice versa. The Fed right now should do exactly the same (FWIW I think it has gone to far with hikes,) with or without these fixes, no?
Of course I do agree that in an economy less exposed to energy shocks or (because e.g. of better child care) greater supply responses to changes in wages, the Fed would have to raise interest rates less to hit its inflation target with less risk of recession. I am distinguishing a) different fiscal policies call for different Fed policy instrument settings to reach a given inflation/employment point and b) different fiscal policies enable/prevent the Fed to attain dominantly superior inflation employment points.
"Fiscal policymakers and businesses have an essential role to play too."
My question about this statement, which in some sense cannot be wrong, is, is it a role that would not be essential were it not for above-target inflation? Or is role fiscal policy and business should play anyway MORE beneficial with above-target inflation than with target level inflation. And to get REALLY nerdy, do the roles depend on the exact kind of inflation: supply shock, demand shock, monetary stimulus?
Thanks for sharing. I listened to an interview with a woman about having to buy her rig from the trucking company. The monthly payments often exceeded what she made for the month, so she quit in a worse financial position than she started. Trucking is a high turnover industry which is another a sign of low pay and bad treatment.
"Fiscal policymakers and businesses have an essential role to play too."
I wonder if this kind of statement is not really just meant to express concern that Fed policy is unnecessarily tight at the time, not a recommendation for business or fiscal policy makers to do anything they should not be doing anyway.
No, there are steps that fiscal policymakers can take to address the causes of supply-side inflation like funding the construction of more housing, subsidizing childcare and universal pre-K so parents work, or energy policy to protect us from swings in global prices. None of these are short term fixes but if we continue to rely on the Fed, then yes, the policy is too tight and workers pay for it. As for businesses, the short-termism of shareholder capitalism has created vulnerabilities like fragile supply chains and other capital investments. It is the Fed's job to achieve maximum employment and stable prices, but the idea that it should do it all is misplaced and weakens our economy.
I do not disagree in substance, probably just semantics. [And you are the author and get to chose the semantics you think is best. :)]
My very narrow point is that it seems to me the things you mention should be done (or not if one disagrees in substance) regardless of the state of inflation or of Fed policy. And vice versa. The Fed right now should do exactly the same (FWIW I think it has gone to far with hikes,) with or without these fixes, no?
Of course I do agree that in an economy less exposed to energy shocks or (because e.g. of better child care) greater supply responses to changes in wages, the Fed would have to raise interest rates less to hit its inflation target with less risk of recession. I am distinguishing a) different fiscal policies call for different Fed policy instrument settings to reach a given inflation/employment point and b) different fiscal policies enable/prevent the Fed to attain dominantly superior inflation employment points.
"Fiscal policymakers and businesses have an essential role to play too."
My question about this statement, which in some sense cannot be wrong, is, is it a role that would not be essential were it not for above-target inflation? Or is role fiscal policy and business should play anyway MORE beneficial with above-target inflation than with target level inflation. And to get REALLY nerdy, do the roles depend on the exact kind of inflation: supply shock, demand shock, monetary stimulus?
Thanks for sharing. I listened to an interview with a woman about having to buy her rig from the trucking company. The monthly payments often exceeded what she made for the month, so she quit in a worse financial position than she started. Trucking is a high turnover industry which is another a sign of low pay and bad treatment.