Robert Reich: Why the Fed’s decision Is dead wrong
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This is bonkers, friends.
Big corporations, meanwhile, are raising prices because they can -- consumers have little choice due to record levels of corporate concentration, and rising costs of supplies has given them perfect cover.
Meanwhile, apologists for large corporations and the Fed are saying the labor market is in fine shape. Rubbish. There are two aspects to the labor market -- jobs and wages. Jobs have increased but hourly wages have plummeted in real terms (adjusted for inflation). So-called "wage increases" haven't come near to making up for all the price increases. There's no hint of the old "wage-price inflation" that's talked about in macroeconomic textbooks.
If the Fed keeps it up -- even if the national economy avoids an official "recession" -- most workers will fall even further behind.
The living standards of nearly everyone who borrows money (that is, everyone except the super-rich, who can borrow at rock-bottom rates because they use their fortunes as collateral) are already dropping. The average rate on credit card debt has reached 17.25 percent (up from 16.34 percent in March, before the Fed began its rate increases). Rates on student loans, car loans, and mortgages are also up from last year.
Inflation is a problem but we can tackle it far better, and without imposing such a humongous burden on the bottom 80 percent of Americans by income. We should do it with a temporary windfall profits tax on oil and food companies, temporary price controls on pharmaceuticals, bolder antitrust enforcement, a tax on stock buybacks, and higher taxes on the wealthy.
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