I often toot my own horn now that I am old and no longer organizing the world around me. A good organizer must be a humble and give other people credit. That is other people help us organizers.
I did not invent the Phillips curve. It was already a staple of the curriculum when I went to graduate school in economics.
The curve was developed by William Phillips an economist who published in 1958. He showed that there was an inverse relationship between inflation and unemployment. As inflation rose tween 2% and 6% the unemployment rate fell a similar amount.
In the intervening years when we have had extraordinary inflation in the United States and in many other countries the Phillips curve has been tested and found to be inapplicable. See the curve in the adjacent graph.
There is still a lingering belief in the Phillips curve that leads the Federal Reserve to be willing to raise interest rates in hopes that a slightly higher inflation rate would yield a subsequent decrease in the unemployment rate.
I think this is entirely phony for totally different reasons. I look at Japan that has had a deflation for 20 years. The Japanese government and the central bank have recently been trying to raise the interest rate in hopes of increasing inflation for a subsequent reduction in unemployment and economic growth.
What I observed is that deflation is most beneficial to the middle class. Their incomes remained stable while their cost of living declined. This is not true at the same time for the wealthy whose income was generally rising and for whom cost-of-living is insignificant. It is the middle class that benefits from deflation or very low inflation.
I see no appreciation of this in Japan because like most countries it is the rich who determine economic policy. Economists don’t see it because it isn’t in their textbooks.
Someday, when commerce has its prominent spokespersons, we will hear leaders who champion deflation for its benefits to the middle class.