Jerome Powell continues tying to drop a daisy cutter on an ant pile, for what reason I could not say:
After briefly pausing its war on inflation last month, the Federal Reserve is resuming the battle by hiking its benchmark interest rate to the highest level in 22 years.
The central bank concluded a two-day policy meeting on Wednesday by announcing that it is raising the federal funds rate by a quarter of a percentage point, lifting the Fed’s target rate to between 5.25% and 5.5%.
The Fed left the door open to further rate hikes this year, with Chair Jerome Powell telling reporters in a news conference that additional tightening is possible unless inflation continues to cool rapidly.
Inflation has dropped from ten percent to three percent since Joe Biden assumed office, without any help from the Fed. So what on earth is it doing?
I can tell you it sure isn’t helping homeowners like me, which is one of the few tools average people have in terms of real wealth and economic power. House sales are down because of slow building, and then the Fed comes along to make it more difficult than it already is.
Asserting that these interest rate hikes will encourage saving is equally absurd. That’s still a big ask on the average American, who is usually carrying debt load (which will be more expensive to service thanks to these rate hikes) in the realm of five figures. There’s no saving when you’re drowning in debt that is getting more expensive.
Then it says it has to get control of the labor market. What kind of shit is this? Economic expansion is somehow a bad thing? Why is this even a function of the board? One would think more velocity would equal more growth, but growth doesn’t interest the banks. I understand a certain increase in interest rates has to happen because of the giant balance sheet suffered during COVID, but there’s no reason to mangle the economy to claw its losses back. It seems self defeating to cause business to go down or go under.
Only the well heeled with big portfolios in mutual funds and other sophisticated financial tools will benefit from this. Again, we are all helping the rich enjoy their best lifestyles, as the American dream becomes more of the mirage in the desert it always has been.