Question for Econo-types

Seth Ackerman sia at nyc.rr.com
Thu Jan 3 17:50:54 PST 2002


Doug Henwood wrote:


> Euroland is closer to deflation than inflation, so I can only guess
> that the ECB wants to keep unemployment high to keep political
> pressure on for "reforms" - i.e., a more U.S.-style labor market,
> i.e., working harder for less.

They come very close to actually admitting it in their reports. Their usual formula is to explain that they *would* lower interest rates more if the labor market were more "flexible," but that under the circumstances it would only generate inflation - even though EU inflation is lower than it is in the US, where "flexibility" already exists.

Seth



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