The Federal Reserve Chairman, Jerome Powell, is valiantly battling against stubborn inflation.
He raised interest rates and continues to keep them high, but no matter what he does, inflation continues to mock him.
In a related story, medical doctor Dr. Jerome Powell has been valiantly battling a patient’s anemia by applying leeches.
But, for some unknown reason, the anemia is not responding to the blood draw, so Dr. Powell will continue to apply more and more leeches.
Doctors and economists the world over wonder why drawing blood doesn’t cure anemia and increasing costs by raising interest rates doesn’t cure inflation.
Americans are falling behind on their credit card bills.
Nearly one in five credit card users have maxed out on their borrowing, according to the Federal Reserve Bank of New York.
People under 30 and those who live in low-income neighborhoods are more likely to be at or close to their credit limit.
Don’t those people realize that Jerome Powell is trying to help them pay off their loans by increasing interest rates?
The debt is a sign borrowers are feeling the strain of rising prices and high interest rates.
“Most investors now think it’s going to be September before the Federal Reserve is ready to start cutting interest rates,” NPR’s Scott Horsley tells Up First.
Yes, another couple of months of drawing blood from the patient should cure his anemia, and another couple of months of increasing prices by raising interest rates should cure inflation.
Though inflation has come down from what it was several years ago, prices are still climbing faster than most would like.
Perhaps increasing the cost of borrowing (which virtually every corporation, farmer, home buyer, car buyer, and appliance buyer does) will cure inflation.
More than half of all credit card users pay their whole balance every month, so they’re not affected by high interest rates.
But the other half pay interest on their purchases, so they are affected.
But don’t worry, Chairman Powell assures us that raising interest rates reduces the cost of everything (with the exception of everything you buy).
Because of this, there’s no incentive to stop spending, which makes it hard to get inflation under control.
Now, if everyone simply would stop spending, the resultant recession and depression might cure inflation.
Then again, there is a thing called “stagflation,” which is a combination of inflation and economic stagnation, so maybe the recession thing isn’t such a good idea.
Oh, someone mentioned that high oil prices cause inflation and that interest rate increases exacerbate inflation.
Ah, but those people were just using facts, not rumors and beliefs, so who could trust them?
Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Of course borrowing costs are not included in CPI, so the fact that people are paying higher costs in interest payments is not reflected in the inflation numbers. It’s an attempt to make higher interest rates look like they are helping inflation, when in fact they simply transfer consumer expenditures from goods and services to reduce demand (and hopefully prices), to expenditures on servicing debt. Consumer costs don’t go down, they just get less in goods and services, while banks and the wealthy investors get increased profits.
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Although interest payment themselves are not included, the cost of interest is what a seller includes when pricing their goods and services for sale. Almost every business borrows and that is a cost above which the business must price its goods and services.
For example, CPI includes house rental, and rental prices are partly dependent on mortgage interest and taxes. CPI includes food prices, which are partly dependent on farmers’ costs. Most farmers borrow at planting time, and pay back loans after harvest.
In short, interest costs generally are not visible in sales prices, but it’s in there.
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Every increase in the interest rate drains more money/blood out of the poor and sends it directly to the wealthy, which increases the wealth inequity. The government pays lip service to helping the poor, yet everything they do says they are helping the wealthy. It doesn’t matter what party gets elected, except that the Republicans drain bank accounts faster than the Democrats. In the end, wealth goes to the wealthy, and poverty comes to the poor. This is the way of capitalism.
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Right.
About the only good things that come from interest rate increases are:
1. They make the dollar stronger which makes imports cheaper, and
2. They force the government to pay higher interest on T-securities, which pumps growth dollars into the economy. But yes, the rich are more likely to own T-securities than the poor are.
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No offence to you, but the wealthy are money magnets, and these days they are using electromagnets which are much, much more powerful.
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That’s part of the Gap. The other part is claiming the federal government “can’t afford” to provide benefits to average people without tax increases.
(No problem “affording” tax breaks for the rich, however.)
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(Exactly!) The real question is not affordability, but rather political will. And as long as the general public is kept in the dark, this will not become a campaign issue.
I am trying to spread the word, but no one is willing to believe. Many of them still think the gold standard applies.
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Politicians don’t want to talk about specifics, only generalities. They say they’ll do this or that but won’t say HOW. They avoid HOW. The record shows they don’t know HOW. But hey, let’s have a few temper-flaring, name-calling debates that go nowhere, but the high-paid media geeks simply love the back-and-forth and the ratings push.
Just once, will the moderator bring up the subject of Monetary Sovereignty as a solution? But that would require the moderator to be knowledgeable of MS.
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I find it weird that people have trouble visualizing MS. Most of us have played Monopoly, where the Bank (i.e. the federal government), by rule, is not allowed to run out of dollars. But somehow, that same concept seems alien even to well-educated people.
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People are overwhelmed; that’s how I see it. After the Great Depression, people felt hopeless. It was beyond their experience. Now, even with MS, people still feel overwhelmed by the inability to, for whatever reason, comprehend the money world. As you’ve so often stated, everyone is under some sort of illusion about money.
Economists don’t get it (science) and their subject matter has nothing to do with it. People don’t get economics or science…a double whammy! You mention MS and economists go into stupid mode…duhhh- whaaat- huhh…They cannot admit they’re wrong about money, like Hey, I got a PhD! In short, the “establishment” wants to remain so. They’re not going to yield w/o utter failure staring them in the face.
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