Replies

One of the biggest conundrums, one that has profound monetary policy implications, and that has been stumping the Fed for the past year is how can it be possible that with 5.5% unemployment there is virtually no wage growth.

The answer to why there has been no wage growth in America , even in the face of monetary policy intentionally intended to drive inflation and wage increase,is very simple.

The competition from low wage, mercantilist export based economies in China , Asia and India are keeping a lid on wages in the western world.

Alan Greenspan was virtually crowing about the fact that the massive growth in the Chinese export economy was allowing him to keep the pedal to the metal on his post 2000 crash Federal Reserve easy money and low interest rate with no inflation for years longer he ever though possible due to Chinese low cost exports.

What Alan neglected to understand or mention, was that those same economic dynamics were leading to the wholesale destruction of American domestic manufacturing and offshoring of American industry to the third world.

Alan also neglected to understand what his policies were doing to generate a real estate bubble in the American economy