Re: Indexing and Inflation as Policy Tools

["John B. O'Donnell" <jackodonnell@xxxxxxxx>]

William F. Hummel wrote:

<<SNIP>>

> There is no doubt that decreasing unemployment would increase the
> total output of the economy, all else equal.  There is also
> general  agreement, I believe, that increasing the purchasing
> power at the lower income levels will stimulate aggregate demand
> and encourage productive growth.
>
> The question then is how realistic is this scenario?  Or would
> events proceed along a path quite different than that envisioned?
> I have argued that inflation is not a control variable, it is
> dependent on may factors that are only partially understood.
> History tells us that both inflation and deflation can spiral out
> of control.

What exactly do you mean by "control variable?" Do you mean that
inflation can not be controlled? Or, are you using the usual
meaning of "control variable" that inflation can not control
something else?

If your meaning is the first then your assertion is bunk; if you
mean the second then - So what?
			-- jbod
___________________________________________________
Come visit and see a new economic perspective --
       http://www.geocities.com/CapitolHill/1067
           Comments/arguments welcome.
..