Re: Krugman: you can’t have a wage/price spiral w/o wages
On Jun 16, 2006, at 12:38 PM, Michael Pollak quoted Paul Krugman:
Fed officials now seem worried that we may be seeing the start of another round of self-sustaining inflation. But is that a realistic fear? Only if you think we can have a wage-price spiral without,
you know, the wages part.
This is true for hourly workers, but there’s been a considerable
pickup in wage growth at the high end. Skilled workers, say
employers, are in short supply, and their pay is getting bid up. It’s
a bifurcated labor market.
Another wrinkle: the line after the 1979 oil shock was that the Fed
would never again indulge sharp rises in energy prices. The way to
bring down oil prices is to engineer a recession. They never hint at
this publicly, much less mention it explicitly, but it’s possible
they also want to nip the commodity price spike in the bud.
That said, Bernanke keeps changing his story every day, even when
he’s not in the presence of the destabilizing Maria Bartiromo.
Doug