Poole: Fed Has to Deter Inflation From Fueling Wages

Former Federal Reserve Bank of St. Louis President William Poole talks about monetary policy, the outlook for inflation and the housing market, and the Fed’s response to the turmoil in credit markets.

click for video

00:00 Fed’s stance on inflation, policy outlook
03:58 Core PCE; energy not a "temporary shock"
05:49 Inflation expectations, wage growth
07:12 State of U.S. banking system
08:32 "More pain" in housing market; energy prices
11:40 Fed’s response to credit market turmoil
14:01 Brokerage regulation; Fed’s independence
15:50 Fed "should stay clear" of dollar policy.

Poole Says Fed Has to Deter Inflation From Fueling Wages: Video
Bloomberg, June 17, 2008 09:51 EDT


What's been said:

Discussions found on the web:
  1. tranches of like commented on Jun 18

    Yes, God forbid wages should rise. What a disaster for the American consumer. Oh, wait.

  2. Douglas Watts commented on Jun 18

    My wife and I are looking at our winter heating bill increasing from $2,500 last season to over $4,000 this coming season. She has been told by her employer that wage increases are frozen to no more than 2 percent, which means a maximum 25 cent an hour raise for her in 2008-2009.

    So yes, any increase in wages would be disastrous to our family.

    It might actually help us keep our pipes from freezing this winter.

    What a fucking joke.

  3. poopscooperforlife commented on Jun 18

    We can’t let wages rise. Sharing the profits with the workers is out of the question.

  4. Ali_M commented on Jun 18

    Milton Friedman states that inflation is totally a monetary phenomenon. It’s the FEDs fault that inflation is out of control. They’re printing money to save the rich bankers… the get richer… and the poor get poorer through the inflation tax. Instead of freezing wages to fight inflation let’s freeze/cap profits.


  5. wally commented on Jun 18

    We’ve had price increases, not inflation, and the difference is crucial. The difference is that the former forces a permanent readjustment of the standard of living for the middle class of Americans. The Fed fully supports that readjustment, both in words and policies.

  6. grumpyoldvet commented on Jun 18

    Raise wages..,Heaven forbid…what do the workers bees do that they deserve a raise…it’s only us rich, financial geniuses that deserve more and more…after all Trickle down economics says when we make more the “lucky duckies” can then have a job….we create, they just consume.. Larry Kudlow et al

  7. me commented on Jun 18

    What everybody said so far.

    This makes me sick. Prince, that screwed up a lot of people walks away with 100 Mil and the little guy can’t get a raise?

    Look at Nardelli. He ruined Home Depot and now Chrysler sales are down 25% one month and much worse than we anticipated. People quitting because they can’t stand him, but he has his money.

    The little guy has sacrificed manufacturing jobs, IT jobs, pensions and health care, and this asshat poole says no raises.

  8. Q commented on Jun 18

    Every time I see this guy speak I am hoping he announces that he’s going to Asia open up a consultancy with Stephen Roach.

    Roach making a long-term bear case for Asia and Poole racking his brain over double digit inflation…ha ha

  9. DavidB commented on Jun 18

    I guess you guys don’t get it. From the fed’s perspective they have to act when increases get into wages because if wages go up then there will be no ‘net gain’ from the printing. The price spiral will just work like a merry go round then with no beginning and no end. That is how the game works. The Fed needs to snip the spiral and unwind it like a piece of DNA. Unfortunately, the banking system has decided that it always has to end at worker’s wallets. They are the red headed step child of the economic system for some reason

    I guess the only consolation us lowly workers can take out of this is that at least interest rates will have to start rising. For those few of us that can scrape together a few pennies and for granny in the basement, at least people will be able to collect some interest. That may become a permanent fixture in the American landscape thanks to the rest of the world being stuffed to the gills with US bucks already and having no place to go except back to their source.

    Don’t tell granny and the workers that interest rates probably won’t keep up with real prices though. We don’t want to destroy their spirits altogether

  10. jw commented on Jun 18

    Given this crisis, Mr. Bush must immediately issue an executive order freezing wages.

  11. dwkunkel commented on Jun 18

    As the dollar loses value, market interest rates will have to rise to compensate lenders for the risk. The Fed will be behind the curve on this as usual.

  12. BSNEATH commented on Jun 18

    Wage Inflation? Maybe the auto workers will go on strike. Or perhaps real estate agents will raise their fees. Investment bankers will demand higher bonuses (OK this one is a possibility)

  13. bdg123 commented on Jun 18

    I don’t know if Poole is jawboning to get commodities down or if he is serious. But, it’s an absolute joke that anyone would talk about inflation. It’s a bigger joke to think the Fed is going to raise rates. The world economy is falling off of a cliff. If one can’t explain why this commodity bubble is deflationary, then their understanding of economics is that of what one gets on the wrapper of a Bazooka Joe bubblegum wrapper…….like all of the talking heads squawking about inflation.

  14. winslow commented on Jun 18

    I always resent when the wealthy (politicos and CEO’s) tell us what is needed for the economy. Funny how whatever is needed; affects them the least.

  15. Fledermaus commented on Jun 18

    You know there was a time when the Treasury gave equal attention to wage inflation and goods inflation.

    I guess the clever people realized that goods inflation means higher profits – in the short term anyway.

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