Corporate greed and takeovers of smaller companies has changed the capitalist ideas of the past which was always promoted as a good thing. We live in a world where the one percent use their money to govern power for themselves. We must get money our of politics. Yes
Getting money out of politics is the key -- which makes me all the more frustrated that senate Democrats have been unable to move forward with campaign finance reform.
Which is why, against all odds and corruption and voter suppression, the Democrats somehow need to be a real majority in the Senate and hold onto the House
The candidates who do not take money from predatory Corporate interests are the ones to vote for. That should be our 'litmus test' for getting dirty money out and regaining meaning for our votes! Consider the source of contributions!
I was appalled when I read yesterday’s news about the Fed hiking rates.
We can get through this inflation by tightening our belts… curbing our appetites for things we really don’t need, buying USA made products as much as possible.
Gas prices are going to remain high for a while. Each time we fill up we just might want to spend that time thinking of the upended lives of Ukrainians and give thanks that we have the freedom to drive around town.
Professor Reich, I am truly glad that I am reading your blogs and learning from you. My question is this: what can an ordinary citizen, armed with growing knowledge and understanding, do with the information you share? I find myself feeling hopeless to change these forces that are so beyond my control. What can I do to affect Powell’s decision making? Forgive me for sounding so naive, and I hope I don’t get pummelled here for sounding and feeling hopeless.
I agree with Benjamin Stockton's response to your question, Mitzi. The messes we're in won't be remedied until **we** join together -- organizing, mobilizing, and energizing one another -- to play a larger role in our political life.
Prof. Reich, thank you for your response. It’s really good to feel heard by someone with the expertise and real-world experience that you possess. As I said to Benjamin Stockton, I am an avid, prolific letter writer with Swing Left and Vote Forward. From August 2020-now, I have written 600+ letters leading up to the elections of Biden, Ossoff and Rev. Warnock, and then Terry McAuliffe, and I am proud to say that each letter is truly unique; I really pour my heart into the message I want to convey as to why it is CRUCIAL to vote if we want to have any chance of keeping and maintaining our democracy. So I am relieved to say that I am not sitting back and simply letting the chips fall as/where they may. I deeply believe in the wisdom of Rabbi Tarfon, circa 0-ish CE: “It is not up to you to complete the task of repairing/perfecting the world, and neither are you free to desist it.” Yes; we all must do our part and carry our share of the load. I truly look forward to reading all of your posts.
Time to go outside the box. I'm urging you, again, to rally an ad hoc Wisdom Council. You could link up with Michael Moore and Greg Palast and you three get the fourth person -- like the Dalai Lama and Jane Goodall. You 4 then get the 5th until you close it and deliberate. Everyone would listen to what you would do if you ran the world!
@Mitzi. The relative helplessness of an individual up against corporations, lobbyists and some Representatives and Senators is a thing. Even in this country of supposedly government for the people, most individuals cannot do much. We must combine our forces to have an effect, and the best tool is our own government when it actually does the people's will (the majority will). So as others say on this page, we need to elect Democrats and increase the majority in both houses of Congress.
Mr. Stockton, good news. I have consistently been writing Get Out The Vote letters with Swing Left since August 2020. Leading up to President Biden’s inauguration, I wrote over 500 letters. In trying to get Terry McAuliffe re-elected governor in VA, I wrote 80 letters. My goal leading up to the 2022 mid-term elections is to write at least 500 letters, encouraging folks to register and VOTE. I am most certainly taking action. I only hope enough people vote and vote Democratic. To do so with so much voter suppression already occurring is challenging, to say the least.
Excellent facts yet I see questions below asking how can we affect what the Fed proposes or does. Start locally with letters and calls from Assemblymen/women to State Representatives in Congress and, yes, the White House. There are phone numbers, emails, et cetera. Google the information. It is all available to us. Let your viewpoints be heard. It may feel like throwing a pebble into the Grand Canyon, but be persistent in reaching out, encourage others to do the same. If we want things to change, we need to show up in order to be heard. Change will not occur overnight, but we citizens can influence those in power. After all, they need our votes.
The Fed, like the Supreme Court, is usually beyond our ability to influence. But several governors of the Fed are now up for confirmation by the Senate. They seem like good people to me, but there needs to be more public discussion about them -- indeed, about the role of the Fed in general, which is far more important to peoples' lives than is generally understood. The main point I was making, though, is that there's another and far preferable means to controlling rising prices than raising interest rates and slowing the economy. That would be a windfall profits tax on profitable corporations that are raising their prices for no reason other than they have the pricing power to do so.
I heard President Biden say that the successful big businesses should increase the wages of their workers, as he looked directly at the left side of the audience, where the Republicans were sitting. It was interesting when Biden mentioned policies like child care for working mothers and the camera panned to show 'centrist' Susan Collins making a face and turning her head in a 'no' motion.
@Laurie. I was shocked to see Ms. Collins' reaction to these humanitarian policies which also would be great for working mothers' budgets and for the general economy. Sad...
I have to believe you are right because you've been studying this subject for a very long time. I just emailed Ro Khanna. I see Biden is trying to address some of these issues. If you think Powell will mess things up....doesn't that mean we need a different Fed Chairman? Who would be a good candidate?
You have to understand that the Fed is primarily there to protect the banking system, that is their main constituency. Higher interest rates favor banks. The Fed doesn't have a role to play in curbing monopolies. Curb monopolies and you curb inflation. Biden is in charge there. The Fed does buy debt. If Congress had the right fiscal priorities it could mandate the Fed buy debt generated to pay for those priorities. The Fed bought a considerable amount of mortgage debt during Covid and that kept mortgages liquid.
Replacing or attacking the Fed is just more rhetoric. Better people yes, but but better Biden policy is best.
Peter, there was a time when people could set up a savings account and actually earn interest. Should the Fed just help banks, even at the cost of the people?
One possibility would be to pressure the Fed to set up virtual personal money accounts using blockchain technology. Everyone would get an account. You could use the account to pay for your purchases, your monthly bills, your government direct deposit checks, your payroll checks. Think of it as a bank to biller account that eliminates the bank, dthe bank checking acct., credit cards and paper money. This type of account is perfectly feasible with modern computer technology. There is no reason why it couldn't pay interest, why it couldn't do payday loans, do overdrafts and many other things that rent seeking finance companies now charge for. I'm sure the Chinese will do it first but there is no reason it can't be done by the Fed. It also prevents money laundering because eventually there is no paper money.
Regarding Putin, I say we use the alliance that Biden has resuscitated to totally freeze out Putin and Russia in every way possible, hard and fast. Kill the Russian banking system entirely, including their currency, and stop every bit of trade.
Time is of the essence because Putin plans to level Ukraine the way he destroyed Grozny, Chechnya. If the Ukrainians won't give up, which is unlikely at this point, he'll just go ahead and destroy Ukraine.
Putin is a thug and a mass-murderer and will stop at nothing to have his way. The Ukrainians will put up a strong defense - stronger if we send them sufficient Stinger missiles to knock every Russian airplane out of the sky, anti-tank missiles to destroy tanks and every offensive vehicle, and somehow get them drones that can destroy their missile batteries. That 40-mile long trail of military vehicles headed south to Kyiv is stuck but can't be destroyed without the weapons Ukrainians need to do so.
Time for sacrifice. And it’s time to get rid of the monster trucks on our roads. Some companies are building electric large trucks and SUVs. We need to get rid of that. The weight will be hard on our roads and highways. We need efficient cars and improvements to public transportation. Our system is set up to hurt those who can least afford it. Young people and low income Americans should get help. Stop making middle class be the ones who are burdened with paying the most. That would be affordable by having the ultra wealthy pay fair taxes, tax corporations at previous rates, lift the SS cap, decrease war budget (I know, we just raised it, that’s an atrocity that needs to change too!)
Very true. Biden & Co. need to do a major selling job so that people know there's a good reason for high gas and oil prices, and Biden needs to clamp down on the oil and gas companies for squeezing the consumers. Windfall profit taxes are good but they come after the fact and don't get to the people who laid out the additional prices per gallon, so something sooner and that impinges more is needed to get these rapacious companies to scale back their outlandish prices.
Professor, I have been reflecting on this situation. I'm convinced that we need a mass consumer movement to avoid using gasoline, avoid spending money on gasoline. I am reminded of WWII when the United States had a "meatless Friday" policy. Regular Americans jumped on the bandwagon to try to help our troops overseas in their mission. These days anything that anyone could do to reduce their cost of transportation would be good for themselves, for the Nation, and for the Europeans who are so dependent on Russian energy products. We need a "Gasless Friday"!
Corporations who still have people coming in to work could implement four 10 hour days and take Fridays off. People who used to go out on the town on Fridays could entertain at home instead. When you must go, ride share with someone and kill two birds. Last evening I got a ride to dinner from a friend who had to go shopping, then after dinner I used the town shuttle service, which is based on electric vehicles, to get home. I felt really smart for not driving my own car, especially since I had two beers at dinner. There are about 260 million adults in this country - if each of us could save 5 gallons a week of gasoline that is 1.3 billion gallons of fuel! Wow. At today's prices that is saving $25 per week per vehicle, that is 6.5 billion dollars not being spent on inflated energy costs.
Let me point out that we Americans have it pretty good in the long run. In most other countries, people pay $2-3.00 per LITRE for gas. And $2.00 to mail even just a post card. On another note:
Just remember that Star Trek's Ferengi Rule of Acquisition #34 says War is Good for Profits. Those making and selling arms to both sides will profit greatly from the invasion of Ukraine.
The stock prices for defense contractors have jumped higher since the Ukraine invasion. War is good for profits and the owners of defense contractor stocks!
It's hideous that anyone can actually profit off of war! They should be forced to see the images of a 6 year old victim of a store that was bombed, bleeding, while doctors frantically try to keep her alive, while her mother nearby is crying her heart out and the child droops over, white as a sheet, save for the blood on her clothes and the medics. Just like in Apocalypse Now! the movie, such greedhead should have eyes taped open to see what created their 'wealth'!
Great arguments that you have made before. Especially was I hopeful when hearing the President remark about “price gouging” in SOTU. And, I recall reading about the Csuite bragging. There should be robust (I hope) debate at the Fed board meeting. We must all express our views. Where exactly can we get our views heard such that they matter, is the question? There’s so much work to do. So many loopholes to close on hedge funds, equity funds…we don’t even know where all of the crazy Russian…Putin…money is hidden. Some speculate it’s all crypto or NFT hidden. We aren’t even at first base figuring out that. Maybe FED can get that on its agenda, too, jointly with Treasury.
For now, we need to emphasize how higher interest rates choke off small business creation when that has been a robust engine helping minorities and women START BUSINESSES, especially coming out of the COVID downturn. I would note that many seniors rely on interest earnings, too, even in these times. There’s going to be sacrifice ahead. Keep on with your wise counsel, please, Robert.
Based on what you said, I wonder whether anyone at the Congressional hearing asked Powell whether increasing interest rates would actually slow inflation as intended. If it doesn't, I fear the Fed's interpretation will be that it hasn't increased interest rates enough, and will raise them even more aggressively. Increasing interest rates might not even slow down the rise in housing prices, as a significant amount of housing stock is being vacuumed up by private equity firms that pay cash.
I think Biden missed a huge opportunity to promote renewable energy in his State of the Union message, as a segue from Russia's invasion of Ukraine. We need to reduce and ultimately eliminate our dependence on the whims of adversarial foreign leaders, as Germany has vowed to do. Instead, he emphasized finding ways to increase the supply of oil and gas. I don't favor begging Saudi Arabia to help us consume more oil.
Finally, I'm sure you read this column in the New York Times, headlined "Larry Summers Shares the Blame for Inflation," which summarizes the government facilitation of corporate greed and irresponsibility that you have been discussing here and in your class lectures: https://www.nytimes.com/2022/02/28/opinion/larry-summers-inflation.html?referrer=masthead The column argues that elite economists of both parties adopted Milton Friedman's notion that the sole social responsibility of business is to increase profits and that so-called free markets could solve all problems, while proclaiming government's alleged failures. As a result, desire for greater and greater profits has trumped resiliency and flexibility at all levels of the supply chain. And here we are.
Yes, exactly! The real risk is not 25 basis points (or a non-zero/non-negative) interest rate: commitment to further rate hikes (e.g. in the event of misreading the market - which, given previous unprecedented policy actions, may present unexpected surprises)...
I'm open to using tax as a resolution but we don't control the senate. I have some suggestions.
First the president has the "bully pulpit" and should threaten price gougers.
Second, when we were in Iraq, we had a similar problem and bills targeted "overcharging in order to defraud or profit excessively from war, military action, or reconstruction efforts -- a felony subject to up to 20 years in prison and fines of up to $1 million or twice the illegal profits of the crime. It confers jurisdiction to U.S. federal courts to hear such cases no matter where they might occur." https://www.congress.gov/bill/110th-congress/house-bill/400. An equivalent for the pandemic should be bipartisan. See also the National Emergency Anti-Profiteering Act of 1990
Windfall profits are merely part of the problem. At the core is oil prices. I've mentioned NOPEC previously. The Saudis control OPEC, the "market maker" for the price of oil internationally by fixing output. The Saudis own the largest oil refineries in the US and control a number of US oil producers and are complicit with Russia. We are in a crisis caused by the pandemic and the US should take on profiteers here and abroad. This used to be a bipartisan issue. https://en.wikipedia.org/wiki/No_Oil_Producing_and_Exporting_Cartels_Act
I’m not an economist and was wondering the same thing: Why the hell is Powell raising interest rates. Your article clearly explained the situation, so Thank You!
Raising taxes puts the money in the hands of those that are in the pockets of those you would tax. I don’t believe the labor stalemate is going to resolve itself through any means other than an organized effort. That would include groups who historically have “unions” but have no bargaining support from them. My AICPA membership is only a benefit to me as an inexpensive insurance supplier. Engineers, actuaries, lawyers, accountants while they may be looked at with distrust also face these compensation disparities.
If I remember correctly, the 2017 Trump tax cuts were supposed to invigorate our economy by spurring investments and creating jobs. So if the current inflation is due to an "overheated" economy, shouldn't we raise taxes on investors and large corporations?
Raising interest rates just makes everything more expensive.
Corporate greed and takeovers of smaller companies has changed the capitalist ideas of the past which was always promoted as a good thing. We live in a world where the one percent use their money to govern power for themselves. We must get money our of politics. Yes
Getting money out of politics is the key -- which makes me all the more frustrated that senate Democrats have been unable to move forward with campaign finance reform.
Which is why, against all odds and corruption and voter suppression, the Democrats somehow need to be a real majority in the Senate and hold onto the House
The candidates who do not take money from predatory Corporate interests are the ones to vote for. That should be our 'litmus test' for getting dirty money out and regaining meaning for our votes! Consider the source of contributions!
votesmart.org is a non-profit that tracks politicians' funding and votes.
Yes is right. support progressives and good Democrat candidates who eschew Corporate slavery.
Most excellent perspective, Professor.
I was appalled when I read yesterday’s news about the Fed hiking rates.
We can get through this inflation by tightening our belts… curbing our appetites for things we really don’t need, buying USA made products as much as possible.
Gas prices are going to remain high for a while. Each time we fill up we just might want to spend that time thinking of the upended lives of Ukrainians and give thanks that we have the freedom to drive around town.
High gas and oil prices in the US could prove a blessing if they accelerate our move to renewable energies.
Absolutely, Professor. Also, folks may use public transportation, walk and ride their bikes. I know I do.
I agree. Americans need to face the situation and lead.
Professor Reich, I am truly glad that I am reading your blogs and learning from you. My question is this: what can an ordinary citizen, armed with growing knowledge and understanding, do with the information you share? I find myself feeling hopeless to change these forces that are so beyond my control. What can I do to affect Powell’s decision making? Forgive me for sounding so naive, and I hope I don’t get pummelled here for sounding and feeling hopeless.
I agree with Benjamin Stockton's response to your question, Mitzi. The messes we're in won't be remedied until **we** join together -- organizing, mobilizing, and energizing one another -- to play a larger role in our political life.
Prof. Reich, thank you for your response. It’s really good to feel heard by someone with the expertise and real-world experience that you possess. As I said to Benjamin Stockton, I am an avid, prolific letter writer with Swing Left and Vote Forward. From August 2020-now, I have written 600+ letters leading up to the elections of Biden, Ossoff and Rev. Warnock, and then Terry McAuliffe, and I am proud to say that each letter is truly unique; I really pour my heart into the message I want to convey as to why it is CRUCIAL to vote if we want to have any chance of keeping and maintaining our democracy. So I am relieved to say that I am not sitting back and simply letting the chips fall as/where they may. I deeply believe in the wisdom of Rabbi Tarfon, circa 0-ish CE: “It is not up to you to complete the task of repairing/perfecting the world, and neither are you free to desist it.” Yes; we all must do our part and carry our share of the load. I truly look forward to reading all of your posts.
Time to go outside the box. I'm urging you, again, to rally an ad hoc Wisdom Council. You could link up with Michael Moore and Greg Palast and you three get the fourth person -- like the Dalai Lama and Jane Goodall. You 4 then get the 5th until you close it and deliberate. Everyone would listen to what you would do if you ran the world!
@Mitzi. The relative helplessness of an individual up against corporations, lobbyists and some Representatives and Senators is a thing. Even in this country of supposedly government for the people, most individuals cannot do much. We must combine our forces to have an effect, and the best tool is our own government when it actually does the people's will (the majority will). So as others say on this page, we need to elect Democrats and increase the majority in both houses of Congress.
Mr. Stockton, good news. I have consistently been writing Get Out The Vote letters with Swing Left since August 2020. Leading up to President Biden’s inauguration, I wrote over 500 letters. In trying to get Terry McAuliffe re-elected governor in VA, I wrote 80 letters. My goal leading up to the 2022 mid-term elections is to write at least 500 letters, encouraging folks to register and VOTE. I am most certainly taking action. I only hope enough people vote and vote Democratic. To do so with so much voter suppression already occurring is challenging, to say the least.
Help register Democrats. https://www.fieldteam6.org/
Never your kind of Democrat.
No pummeling, many of us are trying to feel our way through these times.
Excellent facts yet I see questions below asking how can we affect what the Fed proposes or does. Start locally with letters and calls from Assemblymen/women to State Representatives in Congress and, yes, the White House. There are phone numbers, emails, et cetera. Google the information. It is all available to us. Let your viewpoints be heard. It may feel like throwing a pebble into the Grand Canyon, but be persistent in reaching out, encourage others to do the same. If we want things to change, we need to show up in order to be heard. Change will not occur overnight, but we citizens can influence those in power. After all, they need our votes.
The Fed, like the Supreme Court, is usually beyond our ability to influence. But several governors of the Fed are now up for confirmation by the Senate. They seem like good people to me, but there needs to be more public discussion about them -- indeed, about the role of the Fed in general, which is far more important to peoples' lives than is generally understood. The main point I was making, though, is that there's another and far preferable means to controlling rising prices than raising interest rates and slowing the economy. That would be a windfall profits tax on profitable corporations that are raising their prices for no reason other than they have the pricing power to do so.
Grassroots lobbying organizations are a good idea. Not only do you need labor, you’ll need money.
I heard President Biden say that the successful big businesses should increase the wages of their workers, as he looked directly at the left side of the audience, where the Republicans were sitting. It was interesting when Biden mentioned policies like child care for working mothers and the camera panned to show 'centrist' Susan Collins making a face and turning her head in a 'no' motion.
@Laurie. I was shocked to see Ms. Collins' reaction to these humanitarian policies which also would be great for working mothers' budgets and for the general economy. Sad...
Collins is, and alwasy has been a tool..
Yes, I caught that, and seeing her again brought her and her idiocy back to mind. And she's supposedly one of the "moderate" Republicans.
It would be telling to see where her contributions come from.
I believe all contributions are public record, and few surpises, I'm guessing
Yes, there are sites listing that information. Some have been posted on this forum.
It is also important for the children, the future of our country.
I have to believe you are right because you've been studying this subject for a very long time. I just emailed Ro Khanna. I see Biden is trying to address some of these issues. If you think Powell will mess things up....doesn't that mean we need a different Fed Chairman? Who would be a good candidate?
He was just reappointed.
I wonder if he can be challenged? If what he is planning is so bad for most Americans, is there a remedy?
You have to understand that the Fed is primarily there to protect the banking system, that is their main constituency. Higher interest rates favor banks. The Fed doesn't have a role to play in curbing monopolies. Curb monopolies and you curb inflation. Biden is in charge there. The Fed does buy debt. If Congress had the right fiscal priorities it could mandate the Fed buy debt generated to pay for those priorities. The Fed bought a considerable amount of mortgage debt during Covid and that kept mortgages liquid.
Replacing or attacking the Fed is just more rhetoric. Better people yes, but but better Biden policy is best.
Peter, there was a time when people could set up a savings account and actually earn interest. Should the Fed just help banks, even at the cost of the people?
One possibility would be to pressure the Fed to set up virtual personal money accounts using blockchain technology. Everyone would get an account. You could use the account to pay for your purchases, your monthly bills, your government direct deposit checks, your payroll checks. Think of it as a bank to biller account that eliminates the bank, dthe bank checking acct., credit cards and paper money. This type of account is perfectly feasible with modern computer technology. There is no reason why it couldn't pay interest, why it couldn't do payday loans, do overdrafts and many other things that rent seeking finance companies now charge for. I'm sure the Chinese will do it first but there is no reason it can't be done by the Fed. It also prevents money laundering because eventually there is no paper money.
Agreed on the Fed.
Regarding Putin, I say we use the alliance that Biden has resuscitated to totally freeze out Putin and Russia in every way possible, hard and fast. Kill the Russian banking system entirely, including their currency, and stop every bit of trade.
Time is of the essence because Putin plans to level Ukraine the way he destroyed Grozny, Chechnya. If the Ukrainians won't give up, which is unlikely at this point, he'll just go ahead and destroy Ukraine.
Putin is a thug and a mass-murderer and will stop at nothing to have his way. The Ukrainians will put up a strong defense - stronger if we send them sufficient Stinger missiles to knock every Russian airplane out of the sky, anti-tank missiles to destroy tanks and every offensive vehicle, and somehow get them drones that can destroy their missile batteries. That 40-mile long trail of military vehicles headed south to Kyiv is stuck but can't be destroyed without the weapons Ukrainians need to do so.
We can't stop. If we do, Ukraine dies.
Underlying question here is political. What's the tolerance of Americans for a dramatic increase in gas and oil prices?
Time for sacrifice. And it’s time to get rid of the monster trucks on our roads. Some companies are building electric large trucks and SUVs. We need to get rid of that. The weight will be hard on our roads and highways. We need efficient cars and improvements to public transportation. Our system is set up to hurt those who can least afford it. Young people and low income Americans should get help. Stop making middle class be the ones who are burdened with paying the most. That would be affordable by having the ultra wealthy pay fair taxes, tax corporations at previous rates, lift the SS cap, decrease war budget (I know, we just raised it, that’s an atrocity that needs to change too!)
I heard President Biden say in the State of the Union he was going to use our oil reserves to keep prices down. Is this not the case?
@ Denise Michelle - Yes, but logistically it cannot happen overnight. Putin’s war is harming the entire world and will increase inflation as well.
Very true. Biden & Co. need to do a major selling job so that people know there's a good reason for high gas and oil prices, and Biden needs to clamp down on the oil and gas companies for squeezing the consumers. Windfall profit taxes are good but they come after the fact and don't get to the people who laid out the additional prices per gallon, so something sooner and that impinges more is needed to get these rapacious companies to scale back their outlandish prices.
Professor, I have been reflecting on this situation. I'm convinced that we need a mass consumer movement to avoid using gasoline, avoid spending money on gasoline. I am reminded of WWII when the United States had a "meatless Friday" policy. Regular Americans jumped on the bandwagon to try to help our troops overseas in their mission. These days anything that anyone could do to reduce their cost of transportation would be good for themselves, for the Nation, and for the Europeans who are so dependent on Russian energy products. We need a "Gasless Friday"!
Corporations who still have people coming in to work could implement four 10 hour days and take Fridays off. People who used to go out on the town on Fridays could entertain at home instead. When you must go, ride share with someone and kill two birds. Last evening I got a ride to dinner from a friend who had to go shopping, then after dinner I used the town shuttle service, which is based on electric vehicles, to get home. I felt really smart for not driving my own car, especially since I had two beers at dinner. There are about 260 million adults in this country - if each of us could save 5 gallons a week of gasoline that is 1.3 billion gallons of fuel! Wow. At today's prices that is saving $25 per week per vehicle, that is 6.5 billion dollars not being spent on inflated energy costs.
Let's do this! #gaslessfriday
Let me point out that we Americans have it pretty good in the long run. In most other countries, people pay $2-3.00 per LITRE for gas. And $2.00 to mail even just a post card. On another note:
Just remember that Star Trek's Ferengi Rule of Acquisition #34 says War is Good for Profits. Those making and selling arms to both sides will profit greatly from the invasion of Ukraine.
The stock prices for defense contractors have jumped higher since the Ukraine invasion. War is good for profits and the owners of defense contractor stocks!
It's hideous that anyone can actually profit off of war! They should be forced to see the images of a 6 year old victim of a store that was bombed, bleeding, while doctors frantically try to keep her alive, while her mother nearby is crying her heart out and the child droops over, white as a sheet, save for the blood on her clothes and the medics. Just like in Apocalypse Now! the movie, such greedhead should have eyes taped open to see what created their 'wealth'!
sad, but so true. And Putin's profits in those areas are probably soaring.
War is good for nothing!
War profits should be illegal!
Great arguments that you have made before. Especially was I hopeful when hearing the President remark about “price gouging” in SOTU. And, I recall reading about the Csuite bragging. There should be robust (I hope) debate at the Fed board meeting. We must all express our views. Where exactly can we get our views heard such that they matter, is the question? There’s so much work to do. So many loopholes to close on hedge funds, equity funds…we don’t even know where all of the crazy Russian…Putin…money is hidden. Some speculate it’s all crypto or NFT hidden. We aren’t even at first base figuring out that. Maybe FED can get that on its agenda, too, jointly with Treasury.
For now, we need to emphasize how higher interest rates choke off small business creation when that has been a robust engine helping minorities and women START BUSINESSES, especially coming out of the COVID downturn. I would note that many seniors rely on interest earnings, too, even in these times. There’s going to be sacrifice ahead. Keep on with your wise counsel, please, Robert.
What's a human life worth? Better inflation and recession than human carnage.
It should be priority to stop Putin's senseless and cruel murders of innocent people!
Based on what you said, I wonder whether anyone at the Congressional hearing asked Powell whether increasing interest rates would actually slow inflation as intended. If it doesn't, I fear the Fed's interpretation will be that it hasn't increased interest rates enough, and will raise them even more aggressively. Increasing interest rates might not even slow down the rise in housing prices, as a significant amount of housing stock is being vacuumed up by private equity firms that pay cash.
I think Biden missed a huge opportunity to promote renewable energy in his State of the Union message, as a segue from Russia's invasion of Ukraine. We need to reduce and ultimately eliminate our dependence on the whims of adversarial foreign leaders, as Germany has vowed to do. Instead, he emphasized finding ways to increase the supply of oil and gas. I don't favor begging Saudi Arabia to help us consume more oil.
Finally, I'm sure you read this column in the New York Times, headlined "Larry Summers Shares the Blame for Inflation," which summarizes the government facilitation of corporate greed and irresponsibility that you have been discussing here and in your class lectures: https://www.nytimes.com/2022/02/28/opinion/larry-summers-inflation.html?referrer=masthead The column argues that elite economists of both parties adopted Milton Friedman's notion that the sole social responsibility of business is to increase profits and that so-called free markets could solve all problems, while proclaiming government's alleged failures. As a result, desire for greater and greater profits has trumped resiliency and flexibility at all levels of the supply chain. And here we are.
Yes, exactly! The real risk is not 25 basis points (or a non-zero/non-negative) interest rate: commitment to further rate hikes (e.g. in the event of misreading the market - which, given previous unprecedented policy actions, may present unexpected surprises)...
I'm open to using tax as a resolution but we don't control the senate. I have some suggestions.
First the president has the "bully pulpit" and should threaten price gougers.
Second, when we were in Iraq, we had a similar problem and bills targeted "overcharging in order to defraud or profit excessively from war, military action, or reconstruction efforts -- a felony subject to up to 20 years in prison and fines of up to $1 million or twice the illegal profits of the crime. It confers jurisdiction to U.S. federal courts to hear such cases no matter where they might occur." https://www.congress.gov/bill/110th-congress/house-bill/400. An equivalent for the pandemic should be bipartisan. See also the National Emergency Anti-Profiteering Act of 1990
101st Congress (1989-1990) https://www.congress.gov/bill/101st-congress/house-bill/5582/text?r=7&s=1 https://en.wikipedia.org/wiki/Price_gouging This should be a bipartisan issue.
Windfall profits are merely part of the problem. At the core is oil prices. I've mentioned NOPEC previously. The Saudis control OPEC, the "market maker" for the price of oil internationally by fixing output. The Saudis own the largest oil refineries in the US and control a number of US oil producers and are complicit with Russia. We are in a crisis caused by the pandemic and the US should take on profiteers here and abroad. This used to be a bipartisan issue. https://en.wikipedia.org/wiki/No_Oil_Producing_and_Exporting_Cartels_Act
The DOJ antitrust division, Department of Commerce and the FTC should be bringing cases for profiteering. Here's an example of an enforcement action. Should be headline news. https://www.ftc.gov/news-events/press-releases/2022/02/ftc-enforcement-action-leads-us-dept-education-forgive-717
Biden needs a weekly Podcast to speak directly to the people, the modern day equivelent of FDR's fireside chats..
I’m not an economist and was wondering the same thing: Why the hell is Powell raising interest rates. Your article clearly explained the situation, so Thank You!
Raising taxes puts the money in the hands of those that are in the pockets of those you would tax. I don’t believe the labor stalemate is going to resolve itself through any means other than an organized effort. That would include groups who historically have “unions” but have no bargaining support from them. My AICPA membership is only a benefit to me as an inexpensive insurance supplier. Engineers, actuaries, lawyers, accountants while they may be looked at with distrust also face these compensation disparities.
If I remember correctly, the 2017 Trump tax cuts were supposed to invigorate our economy by spurring investments and creating jobs. So if the current inflation is due to an "overheated" economy, shouldn't we raise taxes on investors and large corporations?
Raising interest rates just makes everything more expensive.