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Faster wage growth is not in the cards

Tim Duy tries, unsuccessfully, to justify the Fed’s tightening bias: …The Fed can always fall back on the unemployment rate to claim that although inflation is low now, it will creep back up to its 2 percent target with the economy operating at full employment. The minutes of the July FOMC meeting made clear that central bankers
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Recently the question has been raised in the econo-blogosphere whether the Fed has been effectively suffocating productivity gains, by crimping demand and cheapening labor whenever businesses—viewing a strong economy and outlook—might think it worth the risk to invest in labor-saving plant and equipment. J.W. Mason, citing the work of economic historian Gavin Wright, notes productivity
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The Fed Shoots The Messenger

The Labor Market Conditions Index Buried in Shallow Grave With all the fanfare of a charlatan skipping town after dark, the U.S. Federal Reserve last week unceremoniously ended its once-ballyhooed Labor Market Conditions Index. Since 2012, LMCI kept showing labor market conditions slipping. The LMCI was introduced in May 2014, and is based on 19
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Stable but Dismal

In Business Insider, Pedro da Costa writes: Indeed, one remarkable trend of the recent economic recovery, which is on track to be the longest but also weakest expansion on record, has been the incredibly steady pace of job-market gains, which once fluctuated much more drastically from month to month. “To our mind what is truly remarkable is the stability of
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“Solving” the inflation conundrum!

Tim Duy, a well-known Fed watcher thinks he has the “solution”: On inflation, some I think interpreted this as dovish: On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little
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The monetary story of the “Great Recession” and ongoing “Long Depression”

Several decades after the “Great Depression”, Milton Friedman (with Anna Schwartz) provided a monetary explanation for the event. 80 years after the Great Depression, we came across the Great Recession. In this instance, the Fed was applauded for avoiding another Great Depression! In 2002, Bernanke himself “apologized” to Milton Friedman, saying “we won´t do it
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