Re: Power of the Dollar and US Strategic Interests

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

William F Hummel wrote:
> OK, this is a matter of jobs and pay scales.  There is nothing the Fed
> can do to solve that problem directly.  It can help create a favorable
> environment by maintaining a low Fed funds rate, but that has a lower
> bound.  Ultimately the solution is to be found in policies that lead
> to real job creation.  Then the amount of spending money will take
> care of itself.  Focusing on increasing the money supply won't help,
>
> William F Hummel


Yet, monetarists claim otherwise: that interest rate policies can and do
 have an impact on inflation which in turn impacts unemployment through
NAIRU.

If full employment is taken as a fixed goal, a corresponding appropriate
money supply will need to be maintained to achieve that goal.  But that
is not what central banks do at present.  They operate on some voodoo
theory that NAIRU is the cardinal rule to keep inflation in check, using
current unemployment to fight future unemployment.  That is the
equivalent of cooking babies to feed senior citizens. A gruesome but apt
description.

Henry C.K. Liu