Let US be Hopeful !!!!

The issues endangering the present economic recovery of the United States also raise serious questions about the way policy-makers conducted their policies in the pre-crisis. And, the most important question is that what objectives the Federal Reserve had in its mind when it decided to not to intervene in a situation when home loans were distributed so cheap, that landed the economy in a recession that has made its own core policies so ineffective that the Federal Reserve lost the control of the economy? Or, the Federal had some other objectives in its mind, like it wanted everybody to have a home? (in best spirits…)Or, Political-Economy?

We know that a Central-bank is entrusted with the task of minimizing inflation and maximizing employment. But recently I read somewhere that unemployment is not its concern and rather it should concentrate on price-stability. I think he was a politician, some Republican. So does he mean that unemployment is a Governments’ concern. By the way it is around 9.5, up by 5 percentage points. Why it should be at 5 percent? ? Keynes said “equilibrium is established with employment at 95% because other 5 percent is busy in swapping between jobs”. He must have a plan, especially for employment. Because, Americans need a plan. He was opposing QE2 and was expecting inflation, later. I mean later. I found this on the web,

                                                



Data Source: US Bureau of Labor Statistics CPI-U
FOR CENTRAL BANK:
It did not respond to the rising inflation between Oct-Nov 2006 to Oct-Nov 2008. A period in which inflation rose from 1.3-1.4 to 5.6 percent. Two years and 4 percent

FOR THE THEN GOVERNMENT
Then Republicans were in power. Even they did not realize.

HOPE
Inflation is an indicator of the level of economic activity and thereby employment. Every time economy adds people in its workforce it generates additional income and this increase finds space in markets and generates demand, and drive up prices. Sometimes there is a capacity and prices do not respond, good for Growth and Employment………….

That is why i thought HE must have a solution.