- by New Deal democrat
You may have already seen this elsewhere, but in case you didn't, Janet Yellin all but officially confirmed the other day that 2% isn't in fact the Fed's target, it's their ceiling. Per the New York Times:
Given that monetary policy affects economic activity and inflation with a substantial lag, it would be imprudent to keep monetary policy on hold until inflation is back to 2 percent,” Ms. Yellen told the National Association for Business Economics .Let me just remind you one more time that in the past 50 years, during recessions the inflation rate has typically fallen by more than 2%. That means that if the Fed is "successful," the next recession will tip over into outright deflation, including deflation in even nominal wages.
Now imagine a wage-price deflationary spiral beginning with Donald Trump as president and the GOP in control of both houses of Congress.