On Nov 18, 2006, at 4:44 PM, tfast wrote:
> Here is a new term "Functional Level of Unemployment" or FLU for
> short. Let
> us define the FLU as existing about or around the actual rate of
> unemployment with a floor of 5% in the US and 6.5% in Canada and
> suggest
> that anything below that rate requires monetary tightening to
> induce just
> enough flexibility into wage demands such that accumulation can resume
> apace. Anything above those rates defines a space where workers are
> too
> tired and to insecure to demand higher wages. Kinda of like having
> the FLU.
> You will find a good deal of empirical support for this hypothesis:)
Ah, but never forget Greenspan in the late 1990s, celebrating how much more scared workers were than the unemployment rate suggested they should be. Kept down those pesky wage demands. Fear of infection is almost as good as the disease itself.
Doug