Word: blinder
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...Alan Blinder, visiting fellow at the Brookings Institution, a prestigious liberal-leaning Washington think tank, and vice chairman of the Federal Reserve from June 1994 to January 1996, asserted that the consensus forecast of most economists seems to be for gross domestic product (that is, total output of goods and services) to grow about 3% to 3.5% over the next year. He would go along, said Blinder, but consumer demand may not be letting up as much as Cohen thinks, and business has an "insatiable demand" for--and appetite to invest in--new information technology. So those predicting...
...that there is anything so bad about even 3%, Wyss points out: "Three percent in the '80s would have been a boom." Blinder is also impressed by how much better the economy is performing than anyone would have thought possible even a few years ago. Today's Fed, he proposed, is engaged in an experiment to see if the unemployment rate can be held permanently at around today's low 4.1% without triggering rapid inflation. The test may or may not work, says Blinder--but if he or Lindsey had suggested that the idea was even worth an experiment when...
...consensus view of the board was that "soft" meant a growth rate of 3% to 3.5% over the next year or so. That, says Blinder, might cause unemployment "to creep up ever so slightly." But it would be another Panglossian development; it would reassure the Fed, says Blinder, that the economy had slowed enough to keep inflation in check with no need for additional interest-rate hikes...
...danger, though, is a weakening of the almighty U.S. dollar. In view of the monstrous U.S. trade deficit--a hemorrhage of greenbacks spent on foreign goods that is currently heading toward $400 billion a year--it is a bit surprising that that hasn't happened already. The reason, says Blinder, is that "the representative centimillionaire in a neutral country like Switzerland or Singapore, sitting down to figure out where to put his last $10 million, is saying, 'The U.S. looks pretty good.'" So the dollars spilled abroad by the trade deficit come right back in the form of investment...
...What we need is thousands of these [rallies] across the country, people letting our representatives know what we think," Blinder said...