Article;
Janet Yellen says economy still needs US Federal Reserves support
Comment;
Generally people talk about law of demand and less generally
about law of supply and law of prices, too… Full-employment is the major goal
of policy because sometimes the central-banks these days are ready to sacrifice
the goal of price-stability for full-employment… The policy makers in the US
should decide what they want to do, they want to restore full-employment or
they want to fight deflation… Krugman says there is downward pressure on
prices, but not negative, but again how prices can go negative, negative prices
mean free goods… I think im not wrong… The FED is unnecessarily trying to push
inflation and even when there is a downward pressure on prices and that makes
the job of pushing inflation higher more difficult… Nevertheless,
liquidity-trap is the major logic behind pushing prices higher… I think the FED
has the trap in mind… But, the trap can be avoided by following the
Pigou-Effect, we have papers on that… Pigou-Effect says lower prices increases
real-wages and income… I think the FED has pumped much liquidity in the system
and unemployment-rate is also near target… I think this is the right time to
let the prices fall, increase real wages and income and demand and achieve
full-employment… Attractive wages will help people join the workforce (law of
prices)… I hope the US Economy has left the liquidity-trap behind…
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