The stagflationofthe 1970s coincided with congressional efforts to takecontrol of the Fed'sbudgetandtherequirement that it seek both fullemploymentandstableprices.
Aside from low inflation, the country is enjoying a sound dollar, rising corporate earnings, a federal budget surplus, fullemployment and no serious threats to our international hegemony.
Federal spending, now 24% of GDP, would be 22% of it if the economy were at fullemployment and therefore bigger, says the Congressional Budget Office (CBO).
In Chile a fiscal law obliges the government to run budget surpluses whenever the economy is at fullemployment and the copper price is above its long-run equilibrium, as estimated by an independent panel.