Should-Read: Lousy title. Good op-ed: Belle Sawhill: Inflation? Bring It On. Workers Could Actually Benefit: “Even if inflation does creep up above 2 percent, we shouldn’t be too worried…

…Having operated below it for many years, the economy may not be harmed if it runs for a few years above that target…. We are in the midst of a big fiscal and monetary experiment. And as with any experiment, the consequences are unknown. What we do know is that the costs of the Great Recession were enormous—at least $4 trillion in lost income…. The biggest losses were experienced by those in the bottom and middle portions of the income distribution who lost jobs and saw much of the equity in their homes destroyed. They are the ones who stand to gain the most if unemployment continues to fall and wages keep rising. Businesses, desperate for workers, reach deeper into the ranks of those who are still jobless, do more training to get those workers up to speed, and pay higher wages as they compete to hire or retain their work force. Discouraged workers — the millions who’ve left the labor force — might actually re-enter it, and workers could find their shrinking share of national income rise again. Besides, economists are not sure when super-low unemployment will set off inflation…. A stronger economy might help the left behind as much as, if not more than, any of these specific measures. The old models don’t seem to be working, and the downside risks of this experiment are limited. Let’s run a truly high-pressure economy and see what happens…


Brad DeLong
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