Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Thank you, Mr. Chairman. First a comment: Microeconomic principles would have led me to think that a move from a high inflation environment to a low inflation environment would cause an increase in what we call productivity, though I don’t know how I would go about directly trying to test or reject that hypothesis. Next I have a question, though I’m not sure it’s going to sound very different from the question that Bob Parry was just raising. Certainly we have data problems with the phenomenon that we call inflation. We have problems with the unemployment statistics—who is counted in the labor force and who is counted as not working—and clearly we have problems with how we measure productivity. And as far as I know, the data measurement problems are getting worse not better. Nevertheless, if we look at a cross-section of currency zones around the world, the similarity in movements of what we measure as inflation is striking while the divergence in what we measure as productivity and unemployment is equally striking. How would you explain that?

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