Source: Cain/Wall Street Journal
“Real income for America’s bottom 90% reached an all-time high in 1999, and at the time Pew Research found that 81% of Americansagreed that free enterprise was a major reason for the country’s success in the 20th century. By June 2015, however, Gallup reported 47% would vote for a socialist. What happened? Real income for the bottom 90%, as measured for the World Top Incomes Database, declined after 1999 and never rebounded. Two terms each of Republican and Democratic administrations failed to end this stagnation, which says all you need to know about why Donald Trump was elected president. Now wages are rising at robust rates – above 3% a year – thanks to cuts in taxes and regulation, with the largest wage increases going to low-wage workers….The Fed still operates on the ‘professor standard,’ enshrined with Bill Clinton’s nominations of pure academics. Their textbooks say strong economic growth, particularly strong wage growth, causes inflation, which Fed policy should temper. Both the Bush and Obama administrations perpetuated the professor standard, and both presided over income stagnation. Ending that stagnation is one goal that unites the political spectrum…The professor standard doesn’t work, and the Fed needs new voices to argue for an approach that does….The prosperity of the 1980s and 1990s gave way to stagnation precisely because dollar stability gave way to volatility. Blame the professor standard….The best way to achieve full employment, price stability, economic growth strong enough to solve our fiscal problems, and sustained income growth for the striving majority is for the Fed to stabilize the dollar. The professor standard will not challenge itself – that much has been proved. That’s why my voice is needed at the Fed.”
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