Morning Must Reads: Income Inequality and Finally Somebody Speaks Up for the Bankers

The Pittsburgh Post-Gazette has published the first in a series of stories on inequality this morning. The conservative position is apparently "What inequality?" followed by "I'm not conceding there is any inequality, but if there were, I'm sure I like it a lot!" Enjoy.

The Philadelphia Inquirer has a glowing profile of Charles Plosser, the President of the Philadelphia Federal Reserve Bank. Plosser, who votes on the Federal Open Market Committee (FOMC) which sets Fed monetary policy, has opposed calls for the FOMC to do more to boost employment growth. One policy option that Plosser opposes is for the Federal Reserve to set a modestly higher inflation target (for example, 4% instead of the current implicit 2% inflation target). Modestly higher inflation will allow debtors (homeowners) to pay off their debts faster.

Plosser opposes this policy on the grounds that monetary policy should not assign "winners and losers." Of course, tolerating persistently high unemployment — and doing nothing to help homeowners who are "under water" (i.e., they owe more on their homes than their homes are worth) — makes those homeowners bigger losers while making the bankers Plosser represents bigger winners. Unfortunately, homeowners and working families aren't represented on the Federal Open Market Committee.


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