The Fed Is Making A Mistake With Rate Hikes

[turbinetree]

"Rate hikes will force millions of Americans into joblessness and make families poorer," said economist Robert Reich. "It's the last thing we need right now."

By Common Dreams — July 29, 2022

The U.S. Federal Reserve is on the verge of causing a disastrous surge in unemployment, progressives said Wednesday after the nation's central bank raised interest rates for the second consecutive month—doubling down on its dogmatic quest to reduce prices even as slowing wage growth offers more evidence that inflation is being driven by corporate profiteering and supply chain issues rather than excess demand.

"Rate hikes will force millions of Americans into joblessness and make families poorer," University of California, Berkeley public policy professor Robert Reich wrote on social media after the Fed once again increased its benchmark policy rate by 75 basis points. "It's the last thing we need right now."

"Every time over the last half-century the Fed has raised interest rates this much and this quickly, it has caused a recession," Reich continued.

https://crooksandliars.com/2022/07/fed-making-mistake-rate-hikes

[Meadowoak]

1. I concur.

[maxsolomon]

2. after so many years of low/no interest

i don't know that they had many other tools to deal with it.

but what do i know, i have a BFA.

[brooklynite]

5. It's amazing how many armchair prosecutors also majored in economics.

[Shermann]

3. Interesting that the left and the right basically agree on this point nt

[House of Roberts]

4. Raising interest rates is ONLY a method to combat broad prosperity,

resulting in high aggregate demand. We don't have that. Even then, it's like chemotherapy, in that you have to poison the body just enough the cancer dies first. What we have is external cost increases, partially from a hangover of weak production, and partially from energy prices rising due to the war in Ukraine. The rest is resulting from greed due to corporations wringing out every dime they can get for the product they sell. I keep hearing about 8-9% inflation, but I see a lot of items up 50% or more.

[uponit7771]

6. K&R, there are some flies in the economy and the Fed is using a sledge hammer to kill them