https://geopoliticaleconomy.substack.com/p/federal-reserve-inflation-desai-hudson

It''s always hard to predict what somebody is going to do if they don't really know what they're doing. But at least we know how Powell and the Federal Reserve bankers think.

We've criticized the Fed's anti-labor bias before. And the great worry is not inflation, it's rising wages.

You said that the purpose is to prevent inflation and support employment.

In reality, we know that ever since Paul Volcker, it's been the opposite. He's worried about rising wage rates, and he blames wages for the fact that prices have been going up.

The problem, he says, is that too many jobs are available.

What's surprising is the number of jobs is much greater than the number of workers. And the reason is that many workers have to work two jobs and sometimes three jobs just to be going.

Powell didn't really know how to read the employment figures and understand that the number of jobs are growing without employment growing at all.

The cause of the inflation was, it's called profit, rent-seeking, profit inflation, not really wages.

The Fed attributes all inflation to labor getting too much money. And that's sort of his guide all along.

The Fed continues the role for which it was founded in 1913, to serve the banks by serving Wall Street. It pretends to the health workers and the 99% by keeping inflation down.

But the real aim is to keep asset prices up.

Powell and the Fed are concerned with inflation overwhelmingly. But it's the prices of real estate, the prices of stocks and bonds that they care about. That's why they had quantitative easing in the first place, but he doesn't talk about that at all.

What do we have to say about the fact that the Fed's job is to increase inequality by raising asset prices, raising stock and bond prices, keeping wages low, and becoming part of the problem instead of the solution?

It's good that you showed the long-term chart. What that chart shows is that the Fed gets everything wrong about the relationship between interest rates and employment.

Lower interest rates are supposed to spur employment on the theory that somehow the banks are lending money to companies to employ people.

But the zero interest rate policy (ZIRP) since 2008 is what enabled private capital to take over corporate industrial firms.

What do they do? They begin downsizing the labor force to increase productivity. They close them down, and they end up leaving Sears-Roebuck and the other firms as bankrupt shells, as we've discussed in a number of our programs before.

Finance has led the whole American economy down the path of deindustrialization, largely by the zero interest rate policy.

It didn't help labor at all. It helped deindustrialize the country, and industrial labor employment has plunged.

Likewise, the high interest rates that you pointed to, they're supposed to lead to unemployment. And that's the basic aim of the Federal Reserve, to cause enough unemployment so wages won't rise, and that will increase profits.

If profits increase, these will be capitalized into higher stock prices.

That's the aim of the Fed, to inflate stock and bond prices and real estate prices. It's succeeded in that all along.

But, as the U.S. economy has become monopolized and corporations are no longer able to keep their prices high, suppose that there's increased employment, wages fall, companies don't have to cut their prices in order to reflect their lower costs, because they're monopolies. They're all mergers and acquisitions.

So this policy of zero interest rates has essentially done exactly the opposite of what the Fed imagines to be the relationship between employment and interest rates.

They simply want the unemployment as part of the larger picture, because that deindustrializes the economy.

Deindustrializing the economy is what's made fortunes for the financial sector, for the one percent.

Here's the problem in their assumptions, and certainly how the New York Times and the public media explain it.

Banks do not lend much credit for consumption. They make a small portion of their loans for credit card loans, auto loans, and student loans to buy education.

But 95 percent of the banks' loans are against assets, to purchase assets, mainly real estate.

The effect is that bank loans, if they increase low interest rates, these loans are used to bid up the price of real estate.

Or now, under low interest rates, you have private capital borrowing at very low rates to take over companies and smash them up. That's what private capital does.

When you realize that the relationship between employment and interest rates is just the opposite of what the Fed says it's doing, you realize that after, I think, from 2008 to today, after 15 years, if they keep on making the same mistake, it's not an accident anymore.

That's their intention. But they don't want to tell the public that our intention is to cause unemployment because we're part of the class war against you, the voter.

They have a cover story. What you read from the speeches is the cover story, not an explanation of what they're really doing in reality. Ctd....