You could be right. The full employment number is somewhat arbitrary. The November rate was 4.6%. If the rate drops another 0.7%, i.e., below 4% unemployment you will hear talk of full employment. We are not quite at full employment , but we are well beyond recession, so this is not the stage of recovery from a deep recession where one would normally be applying a new super stimulus package. Consequently, do not be surprised, if stimulus is applied, even if toned down a bit, to see inflation well above the Fed target creep in. We could easily see enough inflation to push real rates for loans made at the zenith of Fed QE to negative values. If you are, or your company is, planning to raise cash soon, why not do it now, and take advantage of the likelihood of coming inflation, and avoid the higher rates that are virtually certain to be on their way?
its odd watching piezoe operate when he is outside of science. he employs rhetorical devices with such ease and deceit. watch his tricks. 1. the debate? -piezoe assumes away the other side with a specious declaration about a debate. what part of the debate between hayek and keynes was settled? as Piezoe shows Keynes is one of the original supply siders. He said there are times in the cycle where lowering taxes will improve the economy and raise more revenue. So what debate with Hayek was settled? 2. Libertarians - Piezoe sets up a strawman saying libertarians don't want smaller govt and more freedom, they want quality govt. its like he changes the meaning of words in a very stalinist manner. What a bunch of baloney. Libertarians are for limited govt and more freedom. They want smaller federal govt. that is not anarcho capitialism. Anarachy is nothing close to what a libertarian believes in... other than murry rothbard I have never heard anyone say they are for eliminating govt because they believe in freedom. We all know we need limited govt the way the founding fathers set it up. Not the way its run with the 14th amendment justifying massive govt now. 3. What was settled in 1932... absolutely nothing. for every 100 economists who study the great depression you will get about 98 different answers. We have a better idea now because we saw the same thing leading up to the 2008 crisis. When the fed allows cheap stupid money bubbles to happen... excesses build up. They have to be unwound. Some would argue you let the market clean it up. Piezoe and his banker friends would rather have a decade or 2 of a crony japan like economy. Nothing has been settled about this subject. 4. We are very far from full employment. we have 95 million people not in the work force. Some of whom who have never been in it. We also have millions of mc jobs. The first thing trump will do will uncap some of the Obamacare limits that have been destroying good full time jobs. 5. Notice Piezoe is arguing Yellen may have to head off the Trump effect. the FED rolled out is cast of characters this month warning about raising interest rates. If there is inflation heading our way... its because the FED has created so much money the past few years. Hayek tells us that at first creating money via "monetization" of debt does not work. but after that inflation kicks in with a vengence. The FED has set the ground work for an inflation explosion. But, they better not destroy job creation. I don't think the FED will want to play brinkmanship with Trump. Trump may put up with them... but if they oppose him... they risk having their license to print money pulled. They could lose to the power of the bully pulpit plus twitter. Trump has a ton of very motivated Americans on his team... many hope he was right when he said we are going to win so much we will get tired of winning. The FED better not try to stop it.
You are using the term supply side incorrectly. You can look it up on Wiki. Also there are reams of material, books, biographies, collected papers, encylopedia articles, etc., on the Hayek-Keynes debate of the twenties and thirties. You can avail yourself of this reading if you have an interest. The debate was essentially over by 1932, and Hayek did not even bother to respond to Keynes publication of "The General Theory..." in '35 in 'economica', although Keynes sent him copies of the drafts as they were ready, hoping to get Hayek's reaction. Hayek was at the LSE. He had been offered an appointment at the new LSE by Robbins, another classical economist, with the intention that Hayek would be able to effectively counter Keynes. He didn't. Keynes was at Cambridge and by the early 1930's his ideas had already begun to dominate Economic thinking in England, and they would soon dominate in the U.S. as well. Classical economic theory was as good as dead with regard to how one deals with a recession. And it has been dead ever since, despite periodic attempts to revive it.
Classical economists don't need to "deal" with a recession. For one thing, they didn't cause it in the first place. And the number one reason they don't cause anything is nobody ever listens to them when they say do nothing. Keynes on the other hand always seems to have many, many problems he must deal with.
would you call your response a big a red herring, a non sequitor or total nonsense? 1.How do you think I used the term incorrectly? your writing about econ has improved but you still frequently manifest a sophomoric understanding... though you like to name drop. 2. Damn you do not learn. No one won the debate. Its still alive and Hayeks and the Austrian schools ideas are more potent than ever. I explained to you that many people still think we should have let the market liquidate wall street firms that deserved to be liquidated in 2008. The funny thing is... that while we all know Hayek would have preached we liquidate failed businesses and banks... I suggest you are dead ass wrong if you think Keynes would not have agreed. Those bankers leading those banks, blew themselves up and the world economy... they should not still be part of the system. Had we allowed a liqudation - the talent would have reformed quickly into new more nimble and more profitable and more useful units. What we got was zombie banks slowly returning to too big to fail status who still control congress (and wasted money on Hillary Clinton). WE got this zombieized economy at the expense of inflation in many goods and and services and an artificially low interest rate. Plus, we have a ticking time bomb of inflation waiting to happen if we return to a robust economy because we have a mountain of excess liquidity. Which is why your team gets to warn us about trump. They know that when the economy gets strong inflation will come back with vengence as Hayek warns. We have been in the push on a string cycle. But if trump programs help revitalize our economy all that money the FED created is going to hurt. Its not Trumps fault. The FED is struggling to figure out what to do with the distortions their cheap money has created. Had we followed Hayek advice we could be at a much better economic level with a much better foundation and no fear about massive inflation caused by the excess liquidity created by the FED.
At least until he died . Let's not forget that Classical economics dominated the landscape when the Western Nations were struck down by the Great Depression. Perhaps Classical economics didn't cause the great depression (which is not entirely true), nevertheless the classical economists of the day had not a clue how to effectively deal with it. They thought hard times would cure themselves if they did nothing, and of course as they twiddled their thumbs things got even worse, exactly as any Keynesian today would predict! The "multiplier effect" works in both directions!