"..in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis."
In other words there is this aggregate value called "employment" that it's politically expedient to optimize, and the way to do that is to tweak the markets to screw the poor and transfer that wealth to the rich.
Well, yes, if you create a moving wage treadmill that forces people to work harder or fall off, you will get higher employment rates.
That is exactly the policy intent of inflation.
http://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hig...
"..in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis."
In other words there is this aggregate value called "employment" that it's politically expedient to optimize, and the way to do that is to tweak the markets to screw the poor and transfer that wealth to the rich.
Well, yes, if you create a moving wage treadmill that forces people to work harder or fall off, you will get higher employment rates.