Dear Regular Americans,
As forecast, the Federal Reserve Board, which IS the face of the ruling class in USA, has raised the cost of money by another .75% on Wednesday 21 September 2022.
They are doing this to influence "sentiment," in financial market terms. They want to show they are serious about containing inflation (caused by many forces OUTSIDE of the United States-- pandemic, war, global political shifts and so on).
They had already raised rates four times this year: .25% (March); .50% (May); then .75% (June); then .75% (July) and now .75% (September) again.
This is the most rapid rise in rates in 40 years.
Money quote from Washington Post preview the day before (emphasis and commentary added):
When the Federal Reserve first raised interest rates by a whopping three-quarters of a percentage point in June, Chair Jerome H. Powell said the hike was an “unusually large one.”
“I do not expect moves of this size to be common,” Powell said. [Commentary: Really? Said Powell with a straight face then: Now three times this year, and another move this size forecast to come?]
Just three months later, the Fed is poised to do the same thing again — for the third consecutive time. An interest-rate increase that was considered outsize and outlandish until recently has become a bizarre new baseline with inflation showing few signs of improving.
What no one knows yet is whether this new status quo means the bank will push too hard, sending the economy toppling into recession.
(The Washington Post's tentative "journalistic speculation" is laughably timorous and cynically disingenuous.)
In a strategic forecast scenario, we could infer that if the Fed Board aggressively increased rates this fall, they were doing it to put their thumb on the November 8th election scale, by inducing a working class recession.
This is the consistent policy line with the deliberately harsh forecast Powell gave at the Jackson Hole conference in August 2022:
“We’re never gonna say that there are too many people working, but the real point is this: What we hear from people when we meet with them [Commentary: Really? This Trump-like statement is the causal basis for your decision?] is that they really are suffering from inflation,” Powell said. “We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t.”
“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said.
They know they are inducing hardship. They euphemize it as "some pain"; "I wish there were a painless way." They know exactly what their behaviors will bring to the People.
Well, what to do about inflation then? The less "painful" way to contain it would have been to let the world's economies recover from the pandemic and the Ukraine war shock of 2022, and then start containing inflation in 2023 when supply would catch up to demand. The Japanese and Chinese central banks are taking this approach.
This year, 2022, the economies are still too disrupted from the once-in-a-century pandemic's hangover, so of course there are supply shortages. Of course there's major pent-up demand from the locked-down and shutdown pandemic years 2020-2022 (even now COVID is still circulating).
Analysis: inflation affects everyone, rich and poor alike, since the value of all money goes down. It does so for everyone, yet it affects the rich the worst, since they have so much money, and clearly psychologically treasure it the worst.
The mass classes and working classes can manage rising prices better, since they often have to scrimp and save and watch their pennies.
Inflation is an egalitarian problem.
Recession, economic slowdown, and crisis for those whose main sources of money dry up, affects the mass classes and working classes most.
Whole families are affected when workers are laid off. Whole companies get into trouble and some fail out of business, when economic demand drops off.
Recession is largely a social-class specific problem, punching down.
Here’s a conversation from the People’s Memory: A wise elder who lived through the Great Depression of the 1930s, strikingly told us that, to him, it was clear the depression was caused by lack of demand--people just didn't have money. The economy came to a standstill from lack of circulation of demand-supply-demand forces.
Roosevelt and the New Deal put money back in people's pockets, and in circulation through the economy, through government (of the People) policies and actions.
Strategic conclusions: be ready for a serious recession, which we anticipate will be sharp yet not prolonged (they'll turn on the money spigot again, right soon, after it’s had the effect they wanted).
This fall, in the election run-up, be ready for lots of "inflation scare" noise, followed by "recession threat" drumbeats, all designed to increase the fear and insecurity of the People.
The ruling class quite clearly is fine about inducing fear and insecurity in the People, if it brings the election results their way.
It's what they do, and have always done.
This analysis isn't meant to be cynical whatsoever. Howsoever, it's meant to be realistic.
"Everything should be made as simple as possible, but not simpler."
You may have lived long enough, or worked in the research community enough, to know that what is given to the People as conventional wisdom by establishment "experts" is often slanted in favor of the ruling powers.
It's always been so; for centuries the educated church, to its detriment, was the purveyor of this kind of false consciousness. Then academies and universities. Today it’s public intellectuals, captive think tanks, and leashed media organizations.
We can do better.
Yet to liberate the People, it's the People themselves who need to liberate their own minds.
They will. They will overcome. We will overcome.
Signature: ¡Venceremos! (We shall overcome!)