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This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], com

• scotuswroteus 4y ago
  Can't wait for your even handed replies to being challenged on literally anything here, lmao
• stu2b50 4y ago
  Crashing the economy would ease inflation though by cause a big demand hit.
  • ok123456 4y ago
    Our current inflation isn't being driven by demand, therefore decreasing demand won't be an effective lever for dealing with it.
• hornd 4y ago
  This is the current talking point du-jour of the American progressive left, but I think it's safe to say the Fed knows what they're doing and have done this before.
  • r00fus 4y ago
    The "Fed" isn't some apolitical entity. It's lobbied and banks want to crash the economy so their wealthy clients can get in at the bottom. They have an agenda.
    • whimsicalism 4y ago
      Those wealthy clients are already heavily "in." You can make up motives for anything, I guess, but the obvious motive for the Feds actions is surging prices.
    • WillPostForFood 4y ago
      >banks want to crash the economy so their wealthy clients can get in at the bottom This is like the left wing version of q anon craziness. Banks don't want the economy to crash - they are big losers when it crashes.
      • r00fus 4y ago
        This is your point to prove. I proved Fed gets lobbied (see GP comment).
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      • yunwal 4y ago
        Banks are big losers when the economy crashes and they don't anticipate it. Overall if there's no turbulence there's no way to make money as a bank.
• bergenty 4y ago
  Raising rates will curb people’s savings and consumer cash in general. This WILL reduce inflation.
• whimsicalism 4y ago
  > Real inflation seems to be due to price gouging by companies Yes, it is too bad that our previously benevolent corporations all decided to end that benevolence in the year 2021 and gouge prices. > crash the economy for his buddies on Wall Street Of course, exactly what Wall Street wants.
  • guyzero 4y ago
    It's an unexpected result that shortages of core consumer goods - specifically gas and food - cause a rise in prices due to demand but this has become more decoupled from underlying input costs thus... high corporate profits in these areas. It's true that Exxon isn't any more or less rapacious than ever, but their profits are objectively much, much higher.
    • whimsicalism 4y ago
      Of course it depends on the market but many of these "shortages" are only relative to record-high consumer demand for durable goods. Yes, during periods of extremely high demand relative to current supply, profit for suppliers increases. This encourages new entrants to the market who can help boost supply. This is just the basic functioning of the economy and price signals in action. If producing things in short supply weren't profitable, that short supply wouldn't get resolved.
      • guyzero 4y ago
        Gas prices are significantly higher than 2019, total vehicle miles travelled are about the same (https://fred.stlouisfed.org/series/M12MTVUSM227NFWA https://fred.stlouisfed.org/series/M12MTVUSM227NFWA) so there must be a reduction in supply or just straight price gouging to justify the price increase.
        • whimsicalism 4y ago
          There are both supply shocks and demand shocks. Gas prices are definitely undergoing a supply shock right now, which contributes to the price increases (and which the Fed can't help.) But there are also broad-based demand increases.
• whoooooo123 4y ago
  If inflation is caused by selfish companies raising their prices, why are they only doing it now and not, say, three years ago? Did they only decide recently that they want to make more money?
  • xhrpost 4y ago
    It's a good question, seems like corporations have more power to do so now, from linked article: >Corporations have the power to raise prices without losing customers because they face so little competition. Since the 1980s, two-thirds of all American industries have become more concentrated.
    • whoooooo123 4y ago
      Hmmmm, I suppose we did just spend two years crushing small businesses into the ground, so I imagine that big corporations do have less competition than ever at the moment.
• yieldcrv 4y ago
  > his goal is to crash the economy for his buddies on Wall Street nah, any avid trader can take any direction of the market to capitalize on any opportunity it doesnt matter what someone is lobbying for when he was increasing the fed balance sheet, who do you think he was buying from and giving free money to at every transaction? his buddies on wall street its the same any direction
• nightski 4y ago
  I like how the law of supply and demand in economics has been renamed "price gouging" by democrats.
  • SantalBlush 4y ago
    You're not wrong, but we see the same thing with the "labor shortage" rhetoric, which is just conservatives and business owners refusing to acknowledge supply and demand in the labor market.
    • yunwal 4y ago
      Both are valid concerns when demand is inelastic. I'd say this is true in regards to essential goods and services (you can't choose not to buy medicine or healthcare). I have yet to see many cases where it's true for labor. It seems in most cases companies can either implement new automation or just choose not to run as much if they have a labor shortage.
  • yunwal 4y ago
    Laws of supply and demand work very differently when dealing with monopolies/consolidated industries and inelastic goods. Laws of supply and demand only work "how they're supposed to" with either perfect competition or perfect elasticity. So yeah, people don't like that companies are getting away with destroying competition so they can jack up their prices.
• megous 4y ago
  "Crashing the economy"? Any definition of that? It's not like it's a car or a plane. Some metrics will be 5% different than before? Sounds like fearmongering, to me, this kind of language.
• intrasight 4y ago
  > This will do nothing for actually impacting inflation. Correct and incorrect. You are correct about the causes of inflation. But it's the Feds mandate to tame inflation, and their only tool is rates. The correct solution would be for congress to act - but they won't.
• othmanaba1990 4y ago
• WillPostForFood 4y ago
  It already seems to have had an impact on inflation though - we are in a much better place today than 6 months ago with inflation. If real wages decline, and housing declines (both tied to interest rates), then rents will decline. If we need to get energy prices down, we have abundant domestic supply waiting for extraction. High prices are currently a executive branch policy choice.
• ren_engineer 4y ago
  energy companies are simply acting rationally based on the fact that governments have made it clear they want to eliminate them, short term profit maximization is logical. Why would oil companies invest in refineries that will not only cut their profit margin by increasing supply but be shut down by the government in 20-50 years making the investment worthless? This is logic a 5 year old can understand but apparently is too much for the current executive branch to grok every single current economic issue is a direct result of government actions during the pandemic and trying to achieve long term ideological goals that weren't based on rational decision making
  • metabagel 4y ago
    None of what you wrote makes any sense to me. Almost without exception, corporations don’t plan 20 years into the future. You left out supply chain disruptions and consumer demand fluctuation due to the pandemic. It more seems to me like you have an ideological story you’d like to sell.
• SideQuark 4y ago
  > Real inflation seems to be due to price gouging by companies A IGM poll of ~100 of the world's leading economists pretty thoroughly show that your belief is very, very far to the fringe, more so than just about any other topic. [1] They answer the "A significant factor behind today’s higher US inflation is dominant corporations in uncompetitive markets taking advantage of their market power to raise prices in order to increase their profit margins." with 2% strongly agree (with 3% confidence in this answer), 5% agree (7% confidence), 19% uncertain (12% confidence), 51% disagree (52% confidence), 16% strongly disagree (27% confidence), and 7% of no opinion or did not answer. As to economic questions posed to this forum, this one is pretty slam dunk to the side opposite your claim. Reich is about as far to the fringe of economists you can find. Try reading more widely. This forum is a much better place to get information about economics than opinion pieces in papers vying for views. Real reasons for inflation: trillions were added to keep people afloat during COVID, and prices have gone up due to supply chain issues and the war in Ukraine. If companies could simply raise prices willy-nilly, they'd have done it already. [1] https://www.igmchicago.org/surveys/inflation-market-power-and-price-controls/ https://www.igmchicago.org/surveys/inflation-market-power-an...
• lamontcg 4y ago
  > This will do nothing for actually impacting inflation. Instead it will crash the economy. This is literally nonsensical. Businesses will lose pricing power in a recession and will slash prices. Nobody will be buying new cars and their prices will drop, the used market will similarly drop until it finds a new floor. People who are out of work and can't afford their car payments will flood the used car market, etc. Multiply this by all the other goods markets. Same things for rents as people get fired and move back in with their parents or move out of the expensive cities. I think I've responded to you before and I think you've got a nonsensical opinion that price gouging and inflation are in opposition to each other, when they just aren't. If prices rise, that is inflation. If prices rise due to price gouging because demand is inelastic, then that is also inflation. If the fed crashes the economy that will be deflationary and cause a recession, that will reduce prices. Companies can only collude to pump prices when they have inelastic demand, once the economy contracts sharply they have to defect and slash prices again. By crashing the economy Powell intends to break the back of the nascent labor movement and by dropping asset prices will allow the rich to buy up more of the country.