On Sanders and the Fed

Bernie Sanders had a column about the Fed in the NYT about two weeks ago. After you peeled away the tiresome left-wing populist rhetoric, it contained two legitimate points:

1. There is insufficient justification for an increase in interest rates at this point in time:  There is no evidence which suggests that inflation is an imminent problem.  Further interest rate increases will result in a stronger dollar, which will hurt exports and wreak havoc in struggling emerging economies.

2.  Increasing interest rates in response to rising wages exacerbates inequality:  The Fed has taken a lot of unjustified criticism for propping up the stock market, and thereby improving the bottom lines of the 1 percent, at a time when wages have remained stagnant.  What was the alternative–promoting a new Great Depression to spread the misery to everyone?  That said, I would be very concerned if the Fed decides to put the brakes on the economy just because we are starting to see a belated increase in wages, because, whether intentional or not, that would be an act of class warfare.  Trading a slight risk of increased inflation for improved living standards for workers is a sensible gamble at this point in time.