Comments Elsewhere

I read through Kevin’s post on the Fed, and I don’t think he is claiming that inflation is caused by wage increases (or other price increases).

His point is that the Fed has made decisions about monetary policy partly in order to manipulate labor markets so as to keep employment rates within a particular fixed window. When employment is “too high” in their view, they have ratcheted up interest rates with the express purpose of “solving” that “problem.”

I don’t think that depends on a false theory about the causes of inflation. It just depends on reading public policy-oriented statements by Fed board members.