Friday, January 3, 2014

If only the middle class would boldly pay for more government spending

WSJ: Michael Feroli, chief U.S. economist and resident Fed watcher at JP Morgan, agrees, outlining further reasons why a higher inflation goal might be counterproductive. ”Simply announcing a higher inflation target could lead to higher real interest rates and, ex-post, higher real wages and thus lower employment.”
Does that mean it could never work? Not quite, says Mr. Feroli. It just won’t without the cooperation of a bold fiscal policy, which appears unlikely in the United States. “The argument for raising the inflation target is not hopeless, but must be carried out in the context of a more comprehensive stimulus plan,” he says.

Mr. Feroli went further and claimed it was perfectly OK to raise the taxes on executives of JP Morgan to cover stimulus costs. In fact, the board of JPM just voted to have the entire company expropriated by the US Treasury, so we can have stimuli.

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