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I'm not sure it's interest rates or inflation that matters, but unemployment.

Even though post-recession times have been prosperous, In the U.S., most of the jobs have gone to minority groups. Comparing pre-recession highs to last month:

White +660K
Black +2,400K
Asian +2,500K
Latino +6,000K*

The idea is that white resentment is fueling rise of the right. The risk, then, is not about the lack of reliable expectations about prices, but is instead about higher interest rates causing a recession - and the associated unemployment. The solution in the short-term is for the Fed to let the economy run hot (keep rates low, while letting inflation run up past their target).**. That is only sustainable for so long though.

As an aside, one reason for the overall interest rate trend may be that central banks have done a better job of managing the economy. In the last 100 years, recessions have been, on the whole, rarer.***

*BLS historical tables: https://www.bls.gov/cps/cpsatabs.htm

**There's also reason to believe that the longer a recovery goes, the better things are economically for minorities and poor whites.

*** https://fred.stlouisfed.org/series/USRECM

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Here's a link to my past blogging (and discussions involving me) at: New APPS.


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