Re: Conference on Saving and Investment

[ECOELT@xxxxxxxxxxxxxxxx]

The best clue to Alan Blinder's thinking is found in his HARD HEADS, SOFT
HEARTS (1987). Chapter 2, "Striking a Balance Between Unemployment and
Inflation," indicates Blinder's belief in a traditional Phillips curve
with trade-off between inflation and unemployment. In this trade-off,
he comes across as "soft" on inflation. "Inflation is indeed a cruel
tax - but only if your income comes mostly from interest, dividends,
and capital gains." (p. 55) "If we are to push the unemployment rate
down aggressively to its full-employment level (say, 5.8 percent or
lower), it would be nice to have a way to minimize the inflationary
consequences...Tax-based incomes policies that work through markets rather
than against them hold out more hope, but are untested. The share
economy suggested by Martin Weitzman...may yet prove to be the best
idea of all." (p. 65)
	According to the New York Times (April 23, 1994, p. 39,
Janet Yellen is "likely to oppose raising rates much beyond the present
level." Susan Phillips, the other woman on the Fed, is "not an activist
on rate policy." Traditionally, women have tended to be more dovish
or less macho than men when it comes to fighting inflation. The other
possible supporter of Blinder is Lawrence Lindsey, who has "opposed
rate increases in the past."  It seems possible that Greenspan will
be outvoted at some point as was his predecessor, Paul Volcker, earlier.
IMHO, Blinder is the most Keynesian person appointed to the Fed since
Marriner Eccles in the Great Depression. By the end of the thirties,
Eccles was a Keynesian calling for public investment. The key non-
Keynesian at that time was the Secretary of the Treasury, Henry
Morgenthau. Will history repeat itself? Lynn Turgeon ECOELT@VACB
.Hofstra.Edu