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NAIRU: not just bad economics, now also bad politics

Summary:
Janet Yellen has long believed it’s possible for “too many” Americans to have jobs. In her view, shared by many of her generation in the economics profession, consumer prices will rise too fast unless millions of people remain unemployed.Despite this, the outgoing Federal Reserve boss is generally liked by the Left and is sometimes described as a “hero” for workers. Fed board nominee Marvin Goodfriend, however, was lambasted by Democratic Senators Sherrod Brown and Elizabeth Warren during his confirmation hearing for expressing similar opinions.The difference suggests dwindling political support for one of the most bog-standard theories in central banking. Without politicians as adept as Yellen to defend it, the Fed may be forced to abandon the conceit there is always some “natural rate”

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Janet Yellen has long believed it’s possible for “too many” Americans to have jobs. In

Matthew C Klein
I write about the economy and financial markets for Bloomberg View. Before that I wrote for The Economist. I have worked at the world’s largest hedge fund and read every FOMC transcript since May, 1987

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