http://yglesias.thinkprogress.org/archives/2010/05/the-ecbs-bad-reputation.php http://www.cepr.net/index.php/blogs...-ecbs-reputation-as-a-competent-central-bank/ To some extent, this is a technocratic conflict, I guess. But it's more of a "values" conflict. Liberals think that central banks should worry more about workers/consumers and less about employers/investors than is currently the norm.
It's not really a values conflict. What actions could the central bank have taken to help workers and consumers that it didn't take? The comment about inflation appears to be taken out of context. The central banks' only concern isn't inflation, but it's true that sometimes central banks have to inflict short-term pain to reign it in, as Paul Volcker did in the early 1980s. Inflation definitely doesn't help workers!
Obviously, a little bit of inflation is good, but how does high inflation help workers? EDITED TO ADD: I should have been more specific. I was thinking of the 10%-14% inflation rates of the very late 1970s.
Well, there you go. So long as the target inflation rate is 2%, a central bank has very little maneuvering room wrt lowering inflation in the face of a bad economy. Set the target at, say, 4%, that's obviously good for workers, because it makes it easier for a central bank to use interest rates to stem rising unemployment. And unemployment is the real threat to workers/consumers. Not so much for investors/employers. 1% is inflation. So is 1,000% per month.
The Greeks work some of the longest hours in Europe, for low pay, with high living costs. Those early retirements are only for a small number of civil servants. I like your use of the word 'they'. Of course, all Greeks collectively killed those bankers.
I'm only an amateur economist, but it seems fairly clear to me - Banks are run by rich folks. When somebody owes them $, they (rightly) want their money. And they sure as hell don't want inflation where they essentially get paid 5%, 10%, 20% less than what they are rightly owed. They don't want an enforced "haircut" to mess up their perfectly coiffed hairdoes. So they (just like all rich folks) have an exceptionally strong interest in minimizing inflation. They will fight hard to make sure the pain is felt by Joe-Schmo's, to minimize the cost to their bottom line. But when **** goes down in the hood, it does seem a little unfair that the rich make sure the ones paying the price are the little guys with bad "Moe" hairstyles. Shouldn't the clipping shears hit everyone equally?
You're not arguing banks vs. little people, you're arguing for people who have borrowed money prior to inflation to people who will borrow it after. Keep in mind, if wages stay mostly the same, people on salary lose from inflation.