>If inflation is 3% G-span would like it to be 2%.
>He is concerned in this respect, at minimum. Whether
>he has 'real reason' to be concerned depends on whether
>you think 'real' refers to whatever he wants, or to
>what he ought to be concerned with from the standpoint
>of the general welfare. In the latter regard, his
>concern is perverse, IMO.
OK assuming that inflation is as low as claimed, why Gspan's merciless war against inflation despite the ceasfire during the Asia panic? It seems to me part of the bargain the US has with its allies who are financing its current account deficits. This monetary conservatism is part of the price American labor has to pay for the US state's seigniorage priviliges which Japan and Germany continue to support to keep the American market open and US military troops deployed globally. But the constraint on US monetary policy is what the US gives up in return? Is this a plausible read?
>According to you, we've had a whiff.
>
>Where's the rumpus?
I overspoke. There are no signs yet of an actual trend towards accelerating inflation. Greenspan is simply letting the world that he will never let it get to that point. Recent rate hikes have no foundation in inflation fears; that's why they are such effective symbolic acts meant to secure confidence in the dollar. How else does one make sense of what Gspan is up to?
Yours, Rakesh