{"id":8905,"date":"2015-06-08T05:38:47","date_gmt":"2015-06-08T10:38:47","guid":{"rendered":"http:\/\/olduvai.ca\/?p=8905"},"modified":"2015-06-08T05:38:47","modified_gmt":"2015-06-08T10:38:47","slug":"zirp-the-monetary-trick-which-killed-wages","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=8905","title":{"rendered":"ZIRP\u2014\u2014The Monetary Trick Which Killed Wages"},"content":{"rendered":"

ZIRP\u2014\u2014The Monetary Trick Which Killed Wages<\/a><\/h3>\n

Stupid Fed Trick Number 1<\/strong><\/p>\n

The Fed thinks that keeping interest rates low spurs inflation. It was probably happy to see the purported uptick in wage inflation in the just released May jobs report. It wants to see wages start rising to create a bit of inflationary pressure.<\/p>\n

That would be a real trick.<\/p>\n

See, it doesn\u2019t work that way. In fact, it\u2019s just the opposite.<\/p>\n

For the past 35 years, every time the Fed reversed monetary policy, wage rates\u00a0immediately followed\u2026in the same direction! When the Fed eased, the wage inflation rate\u00a0fell. When the Fed tightened, wages rose faster. Not just a couple of times. Every single time!<\/p>\n

If you want to know what\u2019s killing workers wages in the US there it is. ZIRP.<\/p>\n

If the Fed wants to get a little wage inflation, all it needs to do is start raising interest rates.<\/p>\n

\"Wages<\/a><\/p>\n

The above chart shows the annual rate of change in the average hourly wages of production and nonsupervisory employees, which comes from the BLS.<\/p>\n

The same data reveals the second stupid trick. It\u2019s not really a Fed trick, it\u2019s a Wall Street\u00a0economist,\u00a0financial media trick. But trust me, the Fed will use it.<\/p>\n

By now you\u2019ve heard the G-R-R-REAT news that wage gains are heating up! Here\u2019s how the Wall Street Journal put it a few minutes after the jobs report was released on Friday:<\/p>\n

\u201cAt $24.96, average hourly earnings for private-sector workers were up 2.3% in May from a year earlier. That\u2019s the biggest increase since the summer of 2013 a modest acceleration over the past four months and a little faster than the 2% average during the latest economic expansion.\u201d<\/p><\/blockquote>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

ZIRP\u2014\u2014The Monetary Trick Which Killed Wages Stupid Fed Trick Number 1 The Fed thinks that keeping interest rates low spurs inflation. It was probably happy to see the purported uptick in wage inflation in the just released May jobs report. It wants to see wages start rising to create a bit of inflationary pressure. That […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[3598,2120,303,305,426,1154,6202,534,1808,1940,1939],"class_list":["post-8905","post","type-post","status-publish","format-standard","hentry","category-economics","tag-contra-corner","tag-david-stockman","tag-fed","tag-federal-reserve","tag-inflation","tag-interest-rate-policy","tag-lee-adler","tag-monetary-policy","tag-wages","tag-zero-interest-rate-policy","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8905","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8905"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8905\/revisions"}],"predecessor-version":[{"id":8906,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8905\/revisions\/8906"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8905"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8905"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8905"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}