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Mike H
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beancounter, You misunderstand my comment. I didn't mean to imply that I was against bankruptcy, I was more concerned with the government taking or transferring the things the belong to us in favor of the less fortunate or the well-connected. For instance, I believe it was an invasion of property rights for the government, through prepackaged bankruptcy of GM, to circumvent the secured creditors place in line in favor of the unions. If the government can take the rug out from under the rules, how are we supposed to function efficiently? Bankruptcy is one of those rules I was referring to that we must follow in order to have a thriving economy. Everyone knows the rules, until the government changes them, on an individual basis, by not protecting our rights to property.
I suppose you would place protection of property rights under justice as a responsibility of the government, but I believe it deserves special mention. There are some who think justice means taking from those with and giving to those without, but the only way to stabilize the economy, is if there are set rules for everyone to live by. Without property rights, the economy couldn't have grown into what it is today.
Isn't the unemployment rate a lagging indicator? Unless lagging by 9 months or so in close enough to 0 to be considered coincident, I don't see how it could be called coincident. Also, to Mike P., if recovery can't happen until wages and unemployment turned around, we would never make it out of a recession. Eventually, wages and unemployment would reach (or undershoot) equilibrium and then as the economy returns so will the jobs and wages.
I can't draw any conclusion from this, but tonight on Kudlow, Taylor himself said that he thinks the target rate is 0.5%. Wonder which assumption is different between him and the Fed that caused his equation to give him such a different result.
Toggle Commented May 29, 2009 on Inflation Watch at The Skeptical Optimist
I did a similar correlation study between deficits and inflation last month and just updated my post with a link to this. Thanks for the help and inspiration Steve.