Some economists fear the Federal Reserve—humbled after waiting too long to withdraw its support of a booming economy last year—is risking another blunder by potentially raising interest rates too much to combat high inflation.
The Fed has lifted rates by 0.75 percentage point at each of its past three meetings, bringing its benchmark federal-funds rate to a range between 3% and 3.25% last month—the fastest pace of increases since the 1980s. Officials have indicated they could make a fourth increase of 0.75 point at their Nov. 1-2 meeting and raise the rate above 4.5% early next year.
Fed Chairman Jerome Powell has said the central bank isn’t trying to cause a recession, but it can’t fail in its effort to bring down inflation. “I wish there was a painless way to do that. There isn’t,” he said last month.
“There is a record of failed attempts to get inflation under control, which only raises the ultimate costs to society of getting it under control,” Mr. Powell said last month.
Fed officials have spent considerable time studying the 1970s “and will avoid making those mistakes,” said Diane Swonk, chief economist at accounting firm KPMG. “But it opens the door to a whole host of new mistakes.”
THE LIQUIDATION OF AMERICA: Shameless Mainstream Economists Continue to Reward Themselves for Their Monumental Mistakes
Recently the so-called Nobel Prize in Economics was given to two obscure financial theorists (Douglas Diamond and Philip Dybvig) as well as “Bailout Ben” Bernanke, the Federal Reserve Chair who first presided over the beginning of our ongoing economic crisis (which began in 2007 and yet remains pretty much unresolved). First-of-all let me point out that there is NO such thing as a Nobel Prize in Economics, it is actually the Swedish National Bank Prize given at the same time as the real scientific prizes (over the objections from the Nobel family). Moreover, this fake prize was created by financial elites to buttress a particular predatory ideology (which has evolved over the last hundred years from neoclassical to neoliberal and now neofeudal economics). The average recipient is a sixty-seven-year-old white man, affiliated with the ultra-reactionary University of Chicago. Generally speaking, the mainstream is much more a cult than a science, dedicated to defending the debased and degenerate oligarchic culture that it itself created, rather than exploring pathways to widespread prosperity. The 2022 prize is specifically designed enhance the false impression that the inherent fragility of our financial system is somehow all under control. What is so ludicrous about this enterprise is that it is not only a bald-faced lie, but also a complete misrepresentation of the awarded research. The ideas held in such contrived high esteem and misguided actions taken not only dramatically increased the fragility of the total system, they also reinforced festering inequality and add to the mounting disaffection with democratic political institutions.
Some economists fear the Federal Reserve—humbled after waiting too long to withdraw its support of a booming economy last year—is risking another blunder by potentially raising interest rates too much to combat high inflation.
The Fed has lifted rates by 0.75 percentage point at each of its past three meetings, bringing its benchmark federal-funds rate to a range between 3% and 3.25% last month—the fastest pace of increases since the 1980s. Officials have indicated they could make a fourth increase of 0.75 point at their Nov. 1-2 meeting and raise the rate above 4.5% early next year.
Fed Chairman Jerome Powell has said the central bank isn’t trying to cause a recession, but it can’t fail in its effort to bring down inflation. “I wish there was a painless way to do that. There isn’t,” he said last month.
“There is a record of failed attempts to get inflation under control, which only raises the ultimate costs to society of getting it under control,” Mr. Powell said last month.
Fed officials have spent considerable time studying the 1970s “and will avoid making those mistakes,” said Diane Swonk, chief economist at accounting firm KPMG. “But it opens the door to a whole host of new mistakes.”