Cornell Chronicle

Mankand says:

“The near-zero interest rate environment, emergency lending, rapid increase in the money supply, and extraordinary federal account deficits have combined to help create weakness in the dollar. 

“If this trend accelerates, the price of imports should continue to rise and eventually impact consumer prices. According to the latest Bureau of Labor Statistics report, import prices rose 0.9% in August, well above the 0.5% estimate, while the 0.7% rise initially reported for July was revised upward to 1.2%. 

“The data shows that the clock is ticking, and that the Federal Reserve could be forced to focus on putting out an inflationary fire sooner than later.”

Wolfolds says:

“The Federal Reserve’s reaffirmation of the 2012 Monetary Policy Strategy strongly indicates that the Fed intends to allow (and perhaps even encourage) inflation rates higher than we have seen in the past 15 years, with a goal of achieving a long run 2% average inflation rate. The Fed indicated that this policy is ‘most consistent over the longer run with the Federal Reserve’s statutory mandate.’

“A higher average permitted inflation rate, besides reassuring markets that it would not slam on the brakes if inflation briefly exceeded 2%, would provide the Fed with flexibility in responding to downturns. The higher permitted inflation rate would tend to increase the average federal funds rate. The Fed could then be able to effectively respond to economy downturns by lowering that rate when needed, something unlikely to work at the current low funds rate. 

“The recent massive government stimulus spending may well lead to higher inflation in the near future; the Fed’s statement helps to clarify market expectations about its planned response to moderate, and even sustained, levels of inflation above the 2% level.”

Hallock says:

“Employment is a major cost for most organizations, and these are expenses that can be cut quickly, but with incredible pain. These are deeply difficult days for the labor market in the United States and throughout the world. This labor market fell off a cliff and it happened all over the world and immediately. Large numbers of jobs lost were formally ‘temporary’ cuts but as companies realize that their revenue isn’t immediately coming back – or worse yet companies fail – many of these will turn into permanent cuts.

“Just a few months ago, businesses were clamoring to find workers and keep them in their organizations. Unemployment was at a 50-year-low and, by some measures, the economy was clicking along. But not everyone was enjoying the expansion equally. Adjusting for inflation, the median wage and below in the United States over the past 40 years has been roughly flat. So even in the midst of a big expansion and a tiny unemployment rate, many workers struggled. Add a massive spike in unemployment and I don’t see upward pressure on the wages of those workers. In fact, I expect it may get worse.

“I think it may be a time for a big reset on not just how much workers are paid but even how they are paid. Just as we have seen an almost immediate change in the way lots of office work gets done (using technology from home), I think people are willing to think differently. The ways people are paid (mostly for their time; by the hour, day, year) are not necessarily the best way to pay most employees. But it is certainly convenient and has become a norm. For some time, I have thought that technology would be used to think differently about how we pay people, and I predict some of this may happen sooner than originally expected.”