Because they won’t be able to afford to heat and cool their houses, unemployed people will reduce demand for electricity, propane, natural gas, and home heating oil. Less demand means cheaper prices, which reduces inflation. The goal was achieved. Let’s go back to the club for lunch.
While allowing the robber barons who control Wall Street to go amok, the Fed is waging a full-frontal assault on those who are most negatively impacted by inflation. This is the case when the government favors fictional citizens, also known as corporations, above actual citizens, also known as humans.
AN EXCESS PROFITS TAX: THE CASE Anyone with the brain of a mollusc should be able to figure out instinctively that today’s inflation is a result of excessive government spending intended to curb the negative economic repercussions of the pandemic. It was inevitable that the sloshing of money would increase consumer spending. Now all of a sudden, the Fed has decided that the greatest approach to reduce the entirely expected effect of all that government handouts is to lay off a lot of people. What the Fed is doing is more akin to a full “anchors away” panic stop in the middle of Route 95 at rush hour rather than applying the brakes to inflation.
Full employment is viewed favorably by some people. If they have a purpose when they wake up in the morning, they feel valuable. However, that is not how Jerome Powell and his henchmen view it. They believe that inflation is an evil that must be eliminated by whatever means, worse than the communist scourge. Well, if a few people must suffer, then it is for the greater good.
Structure has a role in the issue. The instruments at the Fed’s disposal are extremely limited. In actuality, the only real lever it has to work with to fulfill its purpose is the ability to raise and lower interest rates. Imagine if Congress had decided to add a couple more tools to the Fed’s inventory in its great wisdom.