Wages and Panic Buttons (http://www.nytimes.com/yr/mo/day/oped/03tyso.html) (fwd)

[Max Sawicky]

>From the Tyson article:
Higher prices in turn mean higher interest rates, as lenders insist
on higher returns to protect against future inflation and as the
Federal Reserve acts to quell inflation by raising short-term
interest rates. And higher interest rates mean lower prices for
financial assets like stocks and bonds. The implication of this
chain of simple economic logic is clear: inflation is a common threat
to Americans as workers and as investors.
>>

Boolshit.  I didn't notice this in the piece.  Inflation
is associated with employment and wage growth.  At most
points in post-war U.S. history, some such growth was
possible.  Slack was the rule rather than the exception.
Tyson gives the impression that wage-fed inflation has
been an ever-present threat.

The threat to workers is the Fed and its elite apologists,
not inflation.

It is true that an increase in interest rates reduces
the value of bonds.  I.E., whatever rate of return you
got yesterday, you could do better today, so yesterday's
bond has to fall in price to match that of today's.
The stock part is hinky;  I'll leave that to Henwood.

mbs

-------------
I noticed this when I read it on paper at lunch and forgot mention
it.  She says higher interest rates mean lower prices for sticks and
bonds.  I thought the price of bonds went up when interest rates
went up.  Am I missing a 'not' operator in my thinking somewhere?

--

Joseph Noonan
jfn1 at msc.com