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by JumpCrisscross 1331 days ago
> amount of economic activity and the amount of available labor are what drive prices

The relationship is sufficiently complex to permit e.g. falling unemployment, falling (not negative) wage growth, falling (including negative) growth and falling inflation. It's not a deterministic system.

> in a sense increase combustion is a goal

No, it's not, because the goal--reaching the destination quickly--would be accomplished equally well in an electric car with no combustion. That's the difference between a goal and an effect.

1 comments

Look, I agree that theoretically it’s possible to lower inflation while keeping unemployment low. But the Fed is looking for a causal effect. They want higher unemployment because that will balance the labor supply and reduce wage growth. That’s what the Fed has said. The fact that they’re looking for a causal effect in raising unemployment means the engine analogy is not valid. There is no causal relationship between engine temperature and speed.

I think you’re falling for the no true Scotsman fallacy. We started this conversation talking about whether or not the Fed’s goal is higher unemployment. I presented an argument, in the Fed’s own words, that they plan on lowering inflation by weakening the labor pool. And your response is “that’s not really a goal.” I disagree and, and I don’t see a productive way forward for this conversation. At the very least, you should accept that this is a valid interpretation of the Fed’s own words, and not just some conspiracy theory being peddled.