The Economy Stupid...
Posted by Ken Waldron on June 24, 2022, 10:19 pm
The Federal Reserve says its remedies for inflation ‘will cause pain’, but to whom? |
An interesting article not without merits but then you come to unquestioned excuses: articles of faith like this-
" As economists well know, the very possibility of tackling inflation rests on relieving the upward pressure on prices by diminishing consumer demand. To do so, the Fed will curtail the purchasing power of most citizens – especially those who have the least."
- Fine theory but the current inflation crisis can't be caused by "increased demand" because there is none, Neither in the US nor the UK: as the very same Guardian points out several times. In fact demand is falling for even the most essential goods:
UK and US consumer confidence hits record low; Britons cut back on food shopping – as it happened
Almost half of adults in Great Britain cut back on food spending – ONS
What they all really know but don't want to say is that its Global supply chain inflation caused by the Covid Pandemic, Western (self-)imposed sanctions and in the case of the UK, (again self-imposed) Brexit.
Scarcity, increased costs and increased transport fees makes goods expensive and all the above have contributed to that. Over all this we have commodity pumping and price gouging being carried out by every capitalist able to see a good opportunity to blame others and get away with it.
Raising interest rates will do absolutely nothing to reduce inflation caused by supply side scarcity of goods and increased costs. Reduced spending in both the US and UK shows demand is already crippled by inflation itself. Thus contracting peoples income by increasing the actual cost of their debts:"...curtailing their purchasing power" will in fact acerbate the problem and guarantee a far deeper recession.
"Increasing interest rates to control inflation" is the mantra of Neoliberalism: a philosophy in which the only tool they chose to have is the cost-of-money hammer. Consequently, everything else is a nail.
The author certainly points out that it indeed disadvantages the poor, but worse than this is that they will all be suffering to no advantage for most of the wealthy either because it simply won't work.
So what's the game? The only conclusion to be generous, is that capitalist economics is caught up in loop where misapplied dogma is more important than fact. To be less generous, that it is deliberate policy intended to impoverish all of society excepting of course that tiny sector who own and control the money they intend to make more expensive: it's no longer a matter of capitalist economics but exclusively of financiers economics.