A little Saturday observation of how "birth trauma" is shaping the economic strategy of countries.
Before the Great Depression, America was a labor-deficit country. State by state to the west, new territories were being developed. Any business grew from scratch. Therefore, until the end of the 1920s, an endless stream of migrants went to America, millions of people every year, and it seemed that the workforce would never be enough anyway.
The Great Depression was also a psychological shock for America. Tens of millions of people were out of work. It broke the "American dream" of "endless possibilities - just work," and it also broke Protestant ethics when your godliness was tested through labor.
Since then, the main macroeconomic indicator for the American authorities is the unemployment rate in the country. GDP growth, inflation, national debt, and government bond yields are relegated to second and third plan compared to unemployment. This was confirmed a few days ago by the Fed, having actually declared that the yield on government securities, from the rise of which all investors are now shaking, is nonsense. The main thing for the Fed is low unemployment.
Inflation is the same “birth trauma” for the Russian authorities. Through it, with a price increase of 1000% per year, Russia went through in the 1990s. With the dollarization of the economy (who needs savings in depreciating rubles), with non-payment of wages, and so on. Macroeconomic trash.
Since then, our authorities (the government and the Central Bank) are interested in only one macro indicator - the inflation rate. This is the "sacred cow". GDP growth, household income, investments, etc. - everything is secondary. If it is necessary to keep inflation within the designated corridor, they will sacrifice all other macro-indicators.
Recently, our colleagues from the Federal Reserve System and the Russian Central Bank also announced their priorities. The head of the Central Bank Nabiullina actually said that she was ready to sacrifice the income of the population, just to keep inflation at 4%.
In this example, you can clearly see what strategies governments have and what they are willing to go for for them.