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Robert Burns McDonald's avatar

Key citation: 'Powell insisted that the only way to bring inflation down was to deliberately stifle growth and “soften the labor market” (i.e. push the unemployment rate higher)'. In his eyes, apparently, the only significant driver of inflation is raising wages and the only cure is increased unemployment. In other words, the major role of the central bank is to maintain or increase the level of inequality.

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Wally Grigo's avatar

Can anyone out there explain how higher interest rates can counterintuitively lead to HIGHER inflation? I understand that higher interest income increases spending power, but isn't the vast majority of this income accruing to the top 10%? They've already bought all the toothpaste and toilet paper they need, and I don't care if they spend it on a new yacht or a summer home on Martha's Vineyard. So why would this interest income put pressure on the prices of necessities?

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