The Fed appears ready to raise interest rates. Given slow growth, a weak labor market and trouble in China, is that a good idea? Please vote.

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The benchmark Fed funds rate has been effectively zero since January 2009. The prime achievement of economists Milton Friedman and Anna Schwartz was to show that the Federal Reserve helped turn a severe contraction into the Great Depression by raising interest rates. Some 78 years later, Ben Bernanke’s central bank was determined to show it had learned the lesson.

Now Janet Yellen’s Fed appears poised to raise rates as many as twice this year. That, six years into the recovery, it is time to cautiously return to normal monetary policy.

She has some good reasons — an overheated stock market and, in some places such as Seattle, property market.

But the labor market remains deeply wounded. The “jobs gap” caused by the Great Recession remains — if employment growth continues as it has in recent months, the deficit in jobs would not be made up until 2017. Wages are weak. Inflation is not a danger — far from it. From Europe to China, the risk is deflation. Also, unlike every recession in the post-World War II era, the government responded with an austerity that has held back growth.

I’ll write more about this next week. But in the meantime, what do you think?

The poll has expired. Thank you for your submissions.

This Week’s Links:

China’s long Minsky moment | The New Yorker

Is China’s growth miracle over? | San Francisco Fed

Which country is most likely to have the next financial crisis | Marginal Revolution

Is the local economy a solution to a post-capitalist world? | Naked Capitalism

U.S. mergers and antitrust in 2014 | Tim Taylor

The future of work: Why wages aren’t keeping up | Robert Solow

Greece’s aid addiction | Dambisa Moyo

Today’s Econ Haiku:

The price of stupid

Pay fines or pay for good schools

We import our brains


I invite you to follow me on Twitter, @jontalton