E Kashkari Reveals Dark Secret Fed Plan For Wages

Minneapolis Federal Reserve President Neel Kashkari just revealed a Federal Reserve secret. That secret is that the Fed raises interest rates and slows the economy primarily to clip wage growth. The Fed has other reasons as well, but Kashkari said this, and it reveals a chilling and systematic destruction of labor's share of GDP:

“I think they are making different decisions because they are very worried about accelerating inflation,” specifically an acceleration in wages, Kashkari replied.
“I call this, and I mean this with no disrespect, a ghost story,” 

I leave it to others to determine if worry about an acceleration in wages is a ghost story at this particular time. Certainly, real wages appear high due to low inflation, but low inflation is hardly a threat to the economy. However, it doesn't appear from the following chart that there should be much of a worry about wage growth, though data is delayed. CNBC shows that as of August, 2017, wage growth remains anemic,

No, the important understanding as to the inner working of the Fed, and Fed motives, can be seen through the chart and from a study made by Matthew Yglesias which is shared below, as well as a comment on disposable income over time. So, we can see that the Fed has suppressed wages through recessions:

 

The significant secret divulged by Kashkari is that there are those in the Fed who fear any acceleration in wages and we can see that the Fed has clipped wages continually in the past, citing wages as the primary reason for doing so. This is a reasonable but remarkable conclusion that we must accept as truth, based on his statement coupled with the chart. 

The chart shows the pattern of the proactive attack on wages, which is not just a correlation to this Fed tightening. Some have said that yes, there is a correlation of wage suppression to Fed behavior. But we now know it is more than just a correlation. 

I wrote about one economist who takes this nefarious behavior of the Fed seriously. I quoted Matthew Yglesias's understanding of Fed behavior:

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Disclaimer: I have no financial interest in any companies or industries mentioned. I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice. The ...

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Norman Mogil 6 days ago Contributor's comment

Gary

If the Fed is trying to avoid wage inflation, then it is a phony issue. US labour shortages are being met by robots, not higher wages. Just read this report on what is happening in Wisconsin to find workers--- cheaper robots.

www.pressreader.com/.../281706909784713

Gary Anderson 6 days ago Author's comment

Interesting article, Prof. No, inflation is a phony issue, but wage inflation must be simply an irrational fear on the part of the Fed. One thing about the article, more robots will likely just hurt labor's percentage of GDP even more, creating real problems for the Fed.

Norman Mogil 6 days ago Contributor's comment

Yes, aggregate labour income will fall because of capital deepening as robots take more work away. But that does not mean that average wages will fall. They could go up as robots make their handlers more productive. The substitution of capital for labour has a long history that, in the end, made all of us better off.

Gary Anderson 6 days ago Author's comment

Well, until the Great Recession this substitution for labor has made us better off. We could be coming to a time in history where that is no longer the case as we have a core group of chronically unemployed. The goal of certain futurists and eugenicists is a mass culling of the global population. While it is a radical idea, it is an idea carried by many key elites. It also means that eugenics is not dead. We have a president who refuses to say white supremacy is evil. How far all this goes to the dark side is a concern. It is time to give these white boys who are filled with hate and despair some jobs. I don't have the answers, but the problems are becoming obvious.