Robert Reich (Fed’s Inflation Mistake Continues Federal…)

Wednesday, November 30, 2022

The Fed’s inflationary blunder continues

The Federal Reserve was obsessed with raising interest rates to slow down the economy. This is a huge mistake.

Do you know who suffers the most from these rate hikes?

Much of the pain is being borne by people who are already struggling to cope with rising prices: low-wage workers and the poor.

While the Fed has signaled that its interest rate hikes may not be as drastic in the future, it’s important to remember that these hikes no longer address the main driver of inflation—powerful corporations that drive up prices to increase their profits.

Right now, the Fed and most of the economic establishment are mistakenly fixated on a wage-price spiral—wage increases push prices up—when they should be worried about a profit-price spiral—corporate profits drive prices up.

The burden of controlling inflation falls not on fighting the key driver of rising prices, but on the Fed’s crude instrument of cutting jobs and raising interest rates to fuel a recession. This will only make things worse for people who are already trying to survive.

But it shouldn’t be like that.

Congress and the Biden administration have the power to target corporate greed and protect ordinary people from rising prices.

Know the truth—and urge our leaders in Washington to put the burden of inflation where it should be: on price gouging corporations.