Am I the only one who thinks that it’s horrific that the Fed says that they will keep raising interest rates until more people are out of a job?
Discussion
This is horrifying if true. Is there a source of the fed saying this somewhere?
Read the comments from any of the FOMC announcements from this year. In a nutshell they say employment is too high which drives higher wages from companies competing for workers and this causes inflation.
If you're on the other bird app:
https://twitter.com/chris_tavrou/status/1674101102348849152?s=46&t=xMJQE5_n21fD_TKpHylTOQ
‘Softness in the labour market’ is FED speak for higher unemployment
Tom Luongo has theories on why Powell keeps doing this
If that is their reasoning I wouldn’t agree with it as a cause for inflation. Inflation was caused by interest rates being too low for too long and the government stimulus/debt spending creating money out of thin air both increasing the money supply at a faster rate than the growth of the economy. But if you accept the duel mandate of the Fed is to provide a stable currency and full employment. As long as inflation is at historically high rates and the unemployment rate is at historically low levels, increasing the interest rate is the right call IMO. Better late than never. Not for the purpose of increasing unemployment so workers have less bargaining power but to increase the cost of new debt.
of course it’s horrible. as if the solution to easing inflation is to cool the economy enough to cause job loss.
it is a solution but it is far from the best one.