On Oct 26, 2005, at 4:50 PM, Doug Henwood wrote:
Julio Huato wrote:
Moreover, IMO, *in and by itself* a hawkish monetary policy
doesn't necessarily imply an overall contractionary economic
policy or an enrich-the-rich redistributive policy.
Yeah, I agree with this. Except in extreme instances like the
Volcker crackdown - which was part of a larger ruling class
crackdown - monetary policy is a lot less important to the
distribution of income than other institutional factors, like union
strength, the welfare state, and the patterns of government
spending. I'd say the converse is even more true - that loose
monetary policy has few if any long-term beneficial effects.
The thing is, though, that, in the United States (unlike in the other
OECD countries), almost all other institutional factors -- except war
spending -- are anti-labor (like labor laws that make it difficult to
organize) and pro-cyclical (like toughening bankruptcy laws when
workers, unlike investors, haven't recovered from the recession and
are getting deeper into debt than ever before). So, loose monetary
policy (loose till very recently) was just about the only element of
ruling-class policy that shored up working-class living standards
(with easy credit and rising home prices).
I just read this:
<blockquote>Central bankers from the U.K. to New Zealand may identify
with Ben Bernanke's Federal Reserve more than they did Alan Greenspan's.
Three years since he used his position as a Fed governor to break
with Greenspan and advocate a specific inflation goal when setting
interest rates, Bernanke, co-author of the book ``Inflation
Targeting: Lessons From the International Experience,'' was yesterday
nominated by President George W. Bush to succeed Greenspan as Fed
Chairman on Feb. 1.
The nomination, which is subject to confirmation by the U.S. Senate,
may nudge the Fed in the direction of more than 20 foreign central
banks that pursue numerical inflation levels or ranges, said global
economists and former central bankers. The debate's outcome will
shape how the Fed counters inflation pressures from sources such as
surging energy costs after the Greenspan era comes to an end.
``Bernanke's appointment brings us one step closer to the Fed
targeting inflation like others do,'' said Jim O'Neill, chief
economist at Goldman Sachs Group Inc. in London.
<http://www.bloomberg.com/apps/news?
pid=10000103&sid=aWyGWw.wQ8Sk&refer=us></blockquote>
Adoption of inflation targeting in the US would mean the convergence
of the US with the rest of the OECD countries. Can the world economy
afford convergence? Till now, the arrangement has been that
Americans spend by borrowing at low interest rates what other peoples
have saved.
Yoshie Furuhashi
<http://montages.blogspot.com>
<http://monthlyreview.org>
<http://mrzine.org>
* Mahmoud Ahmadinejad: <http://montages.blogspot.com/2005/07/mahmoud-
ahmadinejads-face.html>; <http://montages.blogspot.com/2005/07/chvez-
congratulates-ahmadinejad.html>; <http://montages.blogspot.com/
2005/06/iranian-working-class-rejects.html>
