Bernie Sanders wrote a finance Opinion piece in the NY Times that is puzzling economists. Expect deeper dives from other sources; in the meantime, here are a couple points of concern.
A 4% unemployment target is misguided. For starters, it’s the wrong number to try to correct. Politicians and news-minute media talk about unemployment using U3, the “official” unemployment rate. If you’re concerned about economic pressure on the working class, though, you need to consider U6, which includes part-timers that want to be full-timers and “discouraged workers” that have simply given up on finding a job.
Like cold medicine, masking U3 symptoms won’t necessarily help the underlying U6 ailment. There might be jobs, but they won’t be good jobs.
A bigger problem is Sanders’ insistence that the Federal Reserve rate not be raised until that unemployment target is met. Those rates have been at zero since the crash, which strips the Fed of its most powerful tool for its core missions: periodically changing that rate according to domestic conditions to fight inflation and promote job growth. That’s also the reason personal savings accounts don’t pay interest any more. The bank simply doesn’t need your money.
Bernie calls lifting the Fed rate from its historically unprecedented, market distorting zero rate the “latest example of our rigged economic system.”
Americans don’t have the mental bandwidth for chasing these cries of “wolf!” while other effective remedies (e.g. infrastructure jobs program) sit on the backburner.
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