Piezoe, Thanks for sharing your thoughts on all that. There's a little book named "Money Mischief : Episodes in Monetary History" by Milton Friedman. Have you read it? In it he talks in detail on his theory as you kinda stated that money supply is independent of inflation (referring to the Phillip Curve). He basically states over and over that the primary driver of domestic inflation is spending (bidding up of prices). If people save money, then it hasn't affect on inflation as if when they spend, which is what people do here in America. I'm not saying we shouldn't increase wages. I agree with you that it seems absurd for anyone to have to work for that pay. And, when I mention inflation, I'm not referring to in a bad way or a good way. If I had to guess, I'd say that not only minimum wage will increase but wages in general. The question to myself has been.. is that why we haven't seen inflation.. because we still haven't seen wage increase. I believe that may be it. But of course I'm often surprised by the outcome of things haha As far as inflation being controlled by the Fed, I don't know that I'd say they are doing a good job controlling inflation. They've basically been fighting deflation (at least they think they are) and have trouble even meeting their target. But, I agree with the heart of what you are saying. In the case of inflation, they could easily start dumping assets (which they sure have a lot of) and raise rates etc. Thanks again for the feedback. Good discussing with you. If you like, I'd be happy to have a copy of the book I mentioned shipped out to you. It's a great read. Just PM me with name and address. Otherwise ebay or amazon would be happy to hook you up with a copy. Oh, and if you find that paper on the Council of Economic Advisers.. shoot me a link. When I read the "500,000 jobs to be lost", as with many things I look over, I'm skeptical. But, didn't look into where exactly they pulled the numbers from. So perhaps a different opinion would shed some balance. Have a good one.
Thanks for reading my long post. I know about Friedman's book as well as a number of others he wrote for the non-economists. On your recommendation I'll order it from Amazon. I always have a book or two I am reading. As you noted the Fed has a lot of assets on their balance sheet right now. If inflation starts to heat up they can reduce still further their Treasury purchases on the secondary market, which should push interest rates a wee bit. And if that fails they can curtail their purchases entirely, and ultimately start selling their balance sheet assets which would soak up a lot of money. They have a lot of arrows in their quiver and Yellen is very experienced and highly competent. What they can't do much about are external shocks. Lets hope we don't have those. The way I see it, $7.25 would be laughable if it wasn't so pathetic. It's an embarrassment. Let's look to Germany rather than Bangladesh.