The Fed’s inflation mistake continues

Most of the pain is borne by people who are already struggling to keep up with rising prices: lower-wage workers and the poor.

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The Federal Reserve has been hellbent on raising interest rates to slow the economy. It’s a huge mistake.

You know who bears most of the pain of these rate hikes?

Most of the pain is borne by people who are already struggling to keep up with rising prices: lower-wage workers and the poor.

While the Fed has signaled that its interest rate increases might not be as drastic moving forward, the important thing to remember is that these hikes already fail to address a major driver of inflation — powerful corporations that are ratcheting up prices to pad their profit margins.

Right now, the Fed and most of the economic establishment are wrongly obsessing about a “wage-price” spiral — wage gains pushing up prices — when they should be worried about a profit-price spiral — corporate profits driving up prices.

Rather than combatting a key driver of rising prices, the onus for controlling inflation is falling entirely on the Fed’s blunt instrument of job-sapping and recession-driving higher interest rates. This will only make things worse for people already struggling to get by.

But it doesn’t have to be this way.

Congress and the Biden administration have the power to take aim at corporate greed and protect everyday people from rising prices.

Know the truth — and urge our leaders in Washington to put the burden of inflation where it belongs: on price-gouging corporations.

Read it on Robert Reich’s blog.

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Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fourteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "Saving Capitalism." He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, co-founder of the nonprofit Inequality Media and co-creator of the award-winning documentary, Inequality for All.

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