Pimco's Paul McCulley has a Kind Word for Inflation

[audreyh1]

I found this latest opinion piece by Paul McCulley of Pimco very interesting.
A Kind Word for Inflation

He argues that it makes no sense for the Fed to raise rates in the face of the current rising of commodity prices, because we are not in the same strong wage pricing power environment we were in the 1970s, and in fact the rising commodity pricing is pushing real wages down, not up. The Fed piling on would just compound the misery.

It's a fascinating comparison of the conditions in the 1970s versus today.

Audrey

[al_bundy]

1970's the union membership rate was a lot higher and union wages are partly based on CPI growth and that was a huge part of the inflation problem. Today unions are a shadow of what they once were and their wages are being cut every time you read the newspaper

[audreyh1]

Yep - that's his basic point. It was the union wage pricing power in the 1970s that turned a temporary inflation spike into a wage price inflation spiral.

Audrey

[soupcxan]

Did you see the guy's picture? MOUSTACHE SOCIETY ALERT! I don't think I can believe a word he says.

[rec7]

Youd think that people would have had enought of silly Inflation.
But I look around me and I see it isnt so.
Some people wanna fill the world with silly Inflation.
And whats wrong with that?
Id like to know, cause here I go again
I love Inflation, I love Inflation,
I love Inflation,I love Inflation,
I cant explain the feelings plain to me, say cant you see?
Ah, the economy gave me more, the economy gave it all to me
Now cant you see,
Whats wrong with that
I need to know, cause here I go again
I love Inflation, I love Inflation
Inflation doesnt come in a minute,
Sometimes it doesnt come at all
I only know Inflation when Im in it
It isnt silly, no, it isnt silly, Inflation isnt silly at all.



Sorry, I could not resist.