Re: Krugman: you can’t have a wage/price spiral w/o wages
On Jun 17, 2006, at 7:03 PM, Julio Huato wrote:
In Latin America in the 1980s, real wages always lagged behind — yet there was a hyper-inflationary spiral. Loose monetary policies didn’t result from an attempt to shore up the real wage. Workers were on the defensive. Can that type of scenario (mutatis mutandis) be excluded in the U.S. case? The public finances can get out of hand (are out of hand already?) as a result of tax cuts for the hyper-rich and military expenditures. So monetary policy may have to relent and accommodate for that with an inflationary tax. Why not?
Creditors would get very angry, that’s why not. And they have a lot
of power.
Doug