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I think OP was using "financial crisis" in a non-technical way and was referring to the Fed's targeted plan to leave an additional 1 million people unemployed b
by Hermitian909 4y ago
I think OP was using "financial crisis" in a non-technical way and was referring to the Fed's targeted plan to leave an additional 1 million people unemployed by the end of the year.
If we assume this is what they meant, I think the post is reasonable. The fed is targeting labor in this way specifically to avoid a wage/price inflation spiral. Those hurt the most by such a spiral are capital holders as the relative power of their capital decreases.
(all this said, I would actually prefer solutions targeting the land-holding class, over labor and capital).
- pgwhalen 4y agoThe fed does not have a “targeted plan to leave an additional 1 million people unemployed by the end of the year.” Please stop spreading such FUD.
- Hermitian909 4y agoI don't see how this is FUD. The fed is intentionally trying to "soften the labor market"[0], and one of the ways the intend to do that is to invoke policies that will increase unemployment to at >4%. Increased unemployment is a target of the current policies. The stated reason for this appears to be inflation control and particularly a wage-price inflation spiral[1], again, fixed with increased unemployment. I don't think any of this should be controversial from an economics or fiscal policy standpoint, this has been the playbook since stagflation in the 70s. [0] https://www.federalreserve.gov/newsevents/speech/powell20220826a.htm https://www.federalreserve.gov/newsevents/speech/powell20220... [1] https://www.cbc.ca/news/business/wage-price-spiral-column-don-pittis-1.6499147 https://www.cbc.ca/news/business/wage-price-spiral-column-do...
- pgwhalen 4y agoThe fed is not _trying_ to soften the labor market, it is trying to reduce inflation. It expects that the labor market may soften as a byproduct. It's right there in your link.