Re: The economy?

[Doug Henwood <dhenwood@xxxxxxxxx>]

On Dec 3, 2006, at 3:29 PM, Eugene Coyle wrote:

> And the droughts may be connected to global warming, but never mind
> that, says the FED, raise interest rates.  That will help the dollar
> and hurt everything else.
>
> The weak dollar will raise the prices of imports.
>
> So the FED will see inflation.

The Fed (why all caps? it's not an acronym) will not let a recession
get out of hand, or at least they'll try to keep it from getting out
of hand. They let things get pretty unwound in the early 1980s, but
that was a major battle in the class struggle from above; they wanted
to break labor, cut wages, and put an end to general social
indiscipline. And they were very successful. But there's nothing like
the welfare state or wildcat strikes around now, so they have no
reason to push unemployment into the double digits. If - and it's a
big if - there's a serious dollar crisis, they might have to tighten
against their will. But, really, they're not stupid. Ever read their
minutes? The bourgeoisie is very well served by its central bankers.

Doug