The Fed Reserve will make yet another 75 basis points rate hike today (Nov 2, 2022) yet inflation is persisting. Is this strategy working or should they try something else?

in #economics2 months ago

Originally posted on Quora November 3, 2022

The Fed is a one trick pony with one blunt instrument to assert control over prices. Raising the cost of borrowing will not reduce cost push inflation that results from supply shocks like losing over 1 million b/d of your refinery capacity to bankruptcies or having a housing shortage of 4 million units or having shipping delays from China (who produces the majority of our crap) that result in thousands of container ships being stuck outside ports or having a record number of farm bankruptcies during the pandemic. The Fed is working to control inflation from the Phillip’s Curve assumption that more workers need to be unemployed, to reach a “natural rate” of unemployment, for inflation to go down. If you pay attention you’ll notice all their assumptions favor the interest of the finance capitalists on wall street at the expense of the proles on main street. Who profits and who pays is always the same. The banksters always get new money first, at the lowest rates, and get bailed out first during recessions. The working class always get new money last, at the highest rates, and get scraps from the master’s table. Understandably this is why a lot of millennials gravitate towards socialism. They don’t quite understand how neoliberal capitalism screws them over so they gravitate towards pseudoscientific theories about “surplus labor value” that end in even worse forms of repression and poverty.

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