Saturday, June 14, 2014

Another Keynesian Economist Calls for Higher Interest Rates

Harvard  economist Greg Mankiw, though ever so gently, follows in the footsteps of my favorite Keynesian, Martin Feldstein (SEE: Top Harvard Economist Warns Inflation Is Running Above 2%), and from a Keynesian perspective hints that the Fed really needs to stop with the current aggressive money printing:

Torsten Slok of Deutsche Bank Research sends along the above graphic.  At face value, it indicates the labor market is almost back to normal. If so, this fact suggests that the Fed may soon need to back off its policy of near zero interest rates, and that the slow pace of economic growth experienced in recent years reflects slow growth in potential due to adverse structural forces rather than inadequate aggregate demand.

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