When it comes to how the Federal Reserve is thinking, Jon Hilsenrath normally knows whereof he speaks so this should strike a chill into the spine of those of us who are hoping to make a dent in mass unemployment:
Determined to keep trying to get the economy going without causing inflation, the Fed is exploring other novel measures.
Note the wording. Not going without causing runaway inflation. Not going without causing an uncontrolled increase in inflation. Going without causing any inflation. At all.
How is that supposed to happen? If twentysomethings living with their parents get jobs they’re going to (a) start commuting to work on a daily basis and (b) want to rent their own apartments. That’s going to mean higher energy prices and higher rents. Which would be a small price to pay for a rapid decline in mass unemployment, and an end to the current toxic process by which the economy is de-skilling and de-capitalizing. But really. How could we go from adding 100,000-200,000 jobs per month to adding 300,000-400,000 jobs per month without that leading to some price increases? And why would it be bad for inflation to accelerate from its current sub-2 percent growth trajectory to something in the 2-4 percent range that’s been typical of the post-Volcker, pre-crisis era?