Housing bubble to burst

[zengrifter]

Housing bubble threatening to burst

Author: Mark Weisbrot
People's Weekly World Newspaper, 07/13/06

Fed fights inflation by increasing unemployment and lowering wages

Everyone recognizes that the U.S. economy is slowing, but the question is, how bad will it get? One disturbing sign is that the Federal Reserve is raising interest rates as the economy slows, and it is not clear when it will stop. This is not good because each rate hike is deliberately designed to slow the economy by causing both consumers and businesses to borrow and therefore buy less. The idea, as Fed economists see it, is that as overall spending is reduced, employers will hire fewer workers. As unemployment rises, employees are in a weaker bargaining position, and this leads to slower wage growth. Slower wage growth, the Fed hopes, will lower inflation.

...continued here - http://www.pww.org/article/articleview/9484/1/330