Dallas Fed Richard Fisher: Fed Risks 'Hotel California' Monetary Policy

Townhall.com ^ | December 15, 2012 | Mike Shedlock

[BfloGuy]

We cannot compete with other countries on labor cost.

That's a fallacy.

Americans are paid more because we are more productive. Now, that isn't to say that we necessarily work harder than foreigners, but that we are supplied with more technology and machinery [capital] to aid us in our production.

If our wages are uncompetitive, it is only because of our government's policy of constant inflation that drives wages artificially higher. End the money pumping, maintain a stable currency, and America could compete.

This is the reason Germany is so desperately trying to stop the EU from inflating its way out of the debt crisis. Germans are very highly-paid -- higher than Americans in many industries. Yet they have maintained their global competitiveness because the Bundesbank has refused to artificially lower interest rates and spur inflation.

Their high wages have been the result of incredibly sophisticated technological innovation -- not because of phony pay hikes due to a cheapened currency.