As was noted several times yesterday, in recent years forecasters and policymakers have been surprised by the decline in the unemployment rate and the size of the sustained ongoing gains in payroll employment.
When these international currencies are also domestic ones, the supply of global liquidity stems from one or more “core countries”. And when the core countries operate as a monopoly or quasimonopoly, over time they tend to take advantage of other countries’ high dependence on their domestic money. By exploiting this “exorbitant privilege”, the core countries develop policy incentives to accommodate shocks (e.g.