Fear of...Wages - Krugman
http://www.nytimes.com/2014/03/14/opinion/krugman-fear-of-wages.html?ref=unemployment&_r=0
Four years ago, some of us watched with a mixture of incredulity and horror as elite discussion of economic policy went completely off the rails. Over the course of just a few months, influential people all over the Western world convinced themselves and each other that budget deficits were an existential threat, trumping any and all concern about mass unemployment. The result was a turn to fiscal austerity that deepened and prolonged the economic crisis, inflicting immense suffering.
And now its happening again. Suddenly, it seems as if all the serious people are telling each other that despite high unemployment theres hardly any slack in labor markets as evidenced by a supposed surge in wages and that the Federal Reserve needs to start raising interest rates very soon to head off the danger of inflation.
To be fair, those making the case for monetary tightening are more thoughtful and less overtly political than the archons of austerity who drove the last wrong turn in policy. But the advice theyre giving could be just as destructive.
O.K., where is this coming from?
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