Wall Street is vexed by the Federal Reserve’s faulty strategy to fight against inflation, which promises to slow the economy instead of solving the three problems that have caused prices to rise.
Under typical circumstances, raising interest rates would tighten credit and reduce wages but the current inflation surge is the result of demand that exceeds both supplies and capacity to deliver goods to the market of the logistics network chains, which had been disrupted by the pandemic; the war in Ukraine; and the influence of corporate greed.
Coronavirus lockdowns shuttered many factories and other production centers, as well as the supply chains they fed into.
Although demand returned to normal, production remains behind and that situation will not improve without adequate capital, which is being squeezed by higher interest rates.
Besides reduced credit, historic deficiencies exposed during the pandemic are resulting in worker demands for greater wages. Actions taken by the Federal Reserve are exacerbating these problems instead of solving them.
The combination of a 3.5% unemployment rate and a 6.6% vacancy rate — nearly two openings for each person searching for a job — is unprecedented in recent years but it comes at a time of great awakening for millions of employees who suddenly became aware that they have been being cheated for 40-plus years by an economic system that was rigged against them.
The war in Ukraine is increasing the demand for scarcities, including food, fuel, and munitions. Sanctions are also cutting off potential suppliers from certain buyers. Without an adequate supply to meet this demand, prices are going up as markets aim to sell to the highest bidder in fulfillment of one of the most basic principles of capitalism.
Employees at Amazon, Starbucks and McDonalds are among those legion of American workers who will no longer be treated by giant profitable corporations like slaves, with pay rates so low that they qualify for public assistance.
While corporate greed is nothing new, a period of more than four decades of too-low taxes on the rich has made it worse than ever. In addition to the slashing of top tax rates during the Reagan and Bush administrations, Trump Republicans enacted a tax cut that will increase deficits by as much as $2 trillion over the next decade
Corporate profits are up at record high levels, corporate tax revenues have gone down considerably and how these trends correspond with the declining quality of life for American workers is indisputable.
After he promised shared prosperity, Trump took the middle-class to the cleaners and the benefits of his economic policies only bubbled up to the richest in a cycle that has played out twice in plain view: First with Trump’s 2017 tax cut, which showered wealth on the richest, offering the middle class a drop in the bucket, and secondly with pandemic policies that inflated the wealth of billionaires, even as working-class Americans suffered a Depression-level crisis. GOP economic mismanagement is damage collateral to the primary goal of reducing taxes for that segment of the population best able to afford them.
Economist Arthur Laffer helped popularize the failed supply-side economics fantasy that the government’s ability to raise revenues will be enhanced by lower taxes but the truth is that cutting tax rates almost never pays for itself. When top tax rates were 70 percent they produced far more revenue than they could since being pushed below 40 percent.
It’s clear that the wealthiest Americans have the money and power to rig democracy and overpower voters’ voices. Right-wing billionaires are trying to use their huge fortunes—which are largely untaxed—to buy elections and pass laws that protect their wealth and power.
No matter how much working people donate genuine progressives will never have the funds needed to wage a fair fight against rich and powerful corporations, but it should not be so expensive to convince American voters to use common sense.
Instead of voting for the candidates with the most money or blindly following a political party, citizens should pay attention to their choices, get involved early in the candidate selection process and choose to support only those contenders who best articulate an agenda for making your life better.
Americans are not poor and in debt because they fell into bad luck or failed to work hard. The economic imbalance we are facing is the intended result of government policies that tilt the playing field in favor of those with the greatest advantages, almost assuring that everyone else loses.
Republicans are not the only politicians employed by corporations, but those establishment Democrats are easy to discern by their focus on non-economic issues—like gun violence, abortion or LGBT rights—combined with disdain for serious transformative policies to raise taxes on the rich, break up ‘too big to fail’ companies, and put government to work for the people with universal health care, more productive education and investments in clean energy.