And the Beatings Will Continue until Morale Improves
The Federal Reserve has raised its benchmark interest rate by another 75 basis point (¾%).
Housing is falling off a cliff, and we are seeing other signs of a significant slow-down, and Fed Chairman Jerome Powell is signalling that he wants to continue driving the economy off of a cliff:
The Federal Reserve approved its third consecutive interest-rate rise of 0.75 percentage point and signaled additional large increases were likely even though they are raising the risk of recession.
Fed officials voted unanimously to lift their benchmark federal-funds rate to a range between 3% and 3.25%, a level last seen in early 2008. Nearly all of them expect to raise rates to between 4% and 4.5% by the end of this year, according to new projections released Wednesday, which would call for sizable rate increases at policy meetings in November and December.
“We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t,” Fed Chairman Jerome Powell said at a news conference after the rate decision.
Officials projected that rate rises will continue into 2023, with most expecting the fed-funds rate to rest around 4.6% by the end of next year. That was up from 3.8% in their projections this past June.
Analysts said they hadn’t expected the Fed to show quite so high an endpoint for the rate. Given how persistently elevated inflation has been, “I wouldn’t be surprised to see them go even higher than what they’ve written down — say, to 5%,” said Ellen Meade, an economist at Duke University who is a former senior adviser at the Fed.
The approach of the Federal Reserve currently, as it always is, is that the solution to inflation is to put downward pressure on ordinary working folks, because the remuneration of ordinary working people is the root of all evil.
They are ignoring supply chain issues, the increasingly large role of monopoly rents in our economy, spikes in energy prices, the effects of anthropogenic climate change on agriculture, and the degree to which resources are siphoned from the real economy by an increasingly parasitic and bloated financial sector.
It’s not particularly surprising that the Federal Reserve operates in this manner, it was conceived at the start to function an ally to capital and big finance in their fights against labor.