The Federal Reserve plan to combat rising inflation by raising interest rates delivers a “body blow to a working class” already suffering from decades of upward wealth redistribution and a pandemic.
This week, the United States is facing whatcalls a Category 5 economic storm as analysts debate whether the U.S. economy is in a recession and how to respond. Today, the Federal Reserve is announcing another interest rate hike, which it says will help fight against inflation and bring down prices, that are up by some 9% since last year as inflation reaches a 40-year high.
Over the last 30 to 40 years, we have experienced here in the United States a radical redistribution of wealth and income. All manner of economists, from all perspectives, have done the research. It’s all very well known. That has caused epoch-changing problems here in the United States that our political headlines are full of literally every day.
But perhaps what’s not understood is who raises the prices. That little economics detail is so often lost. Employers, the class of employers in our society, that’s who sets the prices. Employees are excluded from that activity. Employers in the United States are 1% of the population, if that. Those of us who have to take the prices they choose to raise, we are the 99%.
So, the idea is, by making everything more expensive that involves debts — and in our economy now, debt is everywhere, making it more expensive — masses of people — and who again? The middle and the bottom, who are the worst hit by this, they will have to cut back expenditures, because they’re having to pay more, for example, on their credit card every month.
We can have a debate about it, but the ironic reality that today we are all talking, from the Biden administration and the Republicans, as well, as if interest rate increases is the only thing to do, this is a manipulation of a people that has no justification and is more extreme now than I have seen in my lifetime as a professor of economics here in the United States.
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