![]() Intelligencer spoke with Mason last week about what the mainstream media gets wrong about inflation, how dubious abstractions disguise the anti-worker biases of orthodox economics, and why socialists should find encouragement in the first seven months of the Biden presidency, among other things. Mason believes that Manchin’s understanding of macroeconomics is fundamentally confused - as is the entire mainstream debate about inflation. Mason, a professor at John Jay College and economist at the Roosevelt Institute. Others say that an economy in which millions remain involuntarily unemployed is still quite sick - and that further stimulus is just what the doctor ordered. ![]() On Thursday, Joe Manchin implored Federal Reserve Chairman Jerome Powell to taper the central bank’s stimulus policies, saying, “It’s time to ensure we don’t overprescribe the patient by further stimulating an already strong recovery.” Last week, America’s most powerful senator put one foot in this camp. They point to the unusually high growth in the consumer price index (CPU) in recent months, and insist that the time to get serious about inflation is now. In their view, monetary and fiscal tightening is necessary to avoid “overheating” the economy. Those who counsel an end to high public spending and low interest rates generally do so in the name of price stability. And the focal point of that debate is inflation. This is the central economic debate on Capitol Hill today. What’s contested are the policy implications of that fact: Does the recovery’s strength validate Joe Biden’s high-priced stimulus and the Federal Reserve’s low interest rates? If so, does that mean that Congress should enact the rest of the president’s ambitious agenda for increasing public spending - and/or that the central bank should maintain a loose monetary policy - so we can keep the good times rolling? Or does it mean that public investment and monetary stimulus are no longer necessary, and we should now “normalize” interest rates, pare back the deficit, and let the private sector take things from there? There’s little question that the economic recovery is proceeding nicely. Meanwhile, wages are rising, the labor force is expanding, and productivity growth is booming. Sixteen months after the COVID recession officially ended, the unemployment rate has now fallen to 5.4 percent after the 2008 financial crisis, it took seven years for joblessness to fall that low. Last month, even as the Delta variant exploded, employers added 943,000 jobs to their payrolls. Photo: Ben Hasty/MediaNews Group/Reading Eagle via Getty ImagesĪs America sweats through the dog days of summer, its economy is heating up. ![]()
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