Economic Policy Making, continued

We talked about the goal of stabel gorwth: too much gorwth can lead to market collapse, whether for beanie babies, Tickle Me Elmo, PS2 or housing. So the Fed pays close attention to inflation: boy, does the fed hate inflation.

While Voters might think economic growth in the form of higher wages is good, economists fear it --"what if this contributes to inflation".

Case in point: Friday's Washington Post: In Demand and in Command : The Job Market's Latest Seesaw Pays Off for Applicants

While the headline sounds good, consider this:

The data speak to one of the big questions looming over the economy. If the tight labor market leads to wage growth at roughly the same pace as the nation's output rises, it would be welcome news for workers who have seen scant raises in recent years, would support consumer spending and help continue the economic expansion. But if wages grow too fast, it would create inflation, leading the Federal Reserve to try to put the brakes on the economy in a potentially painful manner by raising interest rates aggressively, slowing the economy.

Yes, economists worry about you having too much money.