ACCORDING TO LIZ - Profiteering by Chevron and Walmart, Jeff Bezos and Elon Musk has been highlighted by the obscene amounts of money made during the pandemic.
With the yoyo of gas prices in the wake of Putin’s invasion of Ukraine, the Federal Reserve jacked its rates by a quarter of a percent on May 4th purportedly to slow inflation, the largest increase since 2000. The markets rejoiced.
Not much, say you, but this is the harbinger of more to come in future months. And will mean higher loan rates for many consumers and businesses.
Given how quickly the price at the pump surged, there is little doubt lending institutions will respond with the same alacrity based on speculation not actual figures.
So why would the Fed again raise interest rates?
To whom do they answer? Who are their friends?
The same people who argue for top-down solutions to economic problems – as if cutting taxes for the wealthy has EVER helped the working class.
They argue that the labor market is out of whack because there are more job openings than people willing to take them. Perhaps if the companies paid living wages?
But no, that is too scary an option for these old-school pundits fearing a repeat of the escalating inflation of the late 1960s and 1970s.
As the economy rebounded after the Great Recession, Wall Street paid itself $26.7 billion in bonuses in 2013, enough to more than double the pay of America’s 1,007,000 minimum wage workers.
Who needed the money more?
Who would spend it in a manner guaranteed to grow the economy.
Today, those same Wall Street executives and the corporate honchos who depend on them to grow their own personal wealth, are again pointing their finger at inflation – poor management by the Democrats – as the cause of prices rising and stocks falling.
They blame inflation and not the profiteers at every company from Amazon to Walmart, but on the fact that the average wage for the little guy as reported in the April jobs report went up 5.5%. Given that prices have gone up on average 8.3% and most Americans have not had a great deal of income from which to save over the pandemic.
Who suffers disproportionately when prices – food prices have increased for 17 months in a row now – go up? The working poor.
Who suffers disproportionately when interest rates go up? The working poor.
Many corporations enjoyed record profits through the pandemic and, in the past couple of decades have faced less and less control over pricing their products. With supply chain challenges still ongoing, they have seized on that as a ready-made excuse to push prices even higher.
For example, Procter & Gamble and Kimberly-Clark dominate the market for household paper products like diapers and toilet paper. They are raising prices, not because they have to but, because they can.
In other cases, companies are creating the shortages themselves. And too often, there are outright lies to government agencies, to the media and to the people. This needs to change.
Who reports on the economy and waves the red flag of inflation? Not working journalists but the media corporations on which they depend for their livelihoods.
The same media conglomerates that are also very profitable corporate entities, with the same coterie of overpaid executives. This also needs to change so that people can get news that is real news, not spun to ring up more advertising dollars or ignored because it’s not sexy.
Putting food on the table, gas on the car, paying the rent and having enough left over for the medical bills may not be sexy but these are very important concerns for most Americans.
Robert Reich, Clinton’s Secretary of Labor now an economic commentator, proposes a Virtuous Cycle where an increased minimum wage allows workers to buy more, increasing demand so companies hire more workers, tax revenues increase, the government can then invest more in people and services, and reduce deficits. Workers are better educated, productivity grows and the economy expands... allowing for even better wages, driving further productivity.
Many Democrats, at least in the House, know the source of our problems and have been calling for continuation of subsidies for the people, increased price controls, uncompromising taxation of windfall profits, and the implementation and enforcement of antitrust regulations.
The Senate, primarily manned by millionaires, wouldn’t know a price increase if it bit them in the ass. Their focus is on the other side of the ledger – how much they can individually make.
And if their economic advisers side with the Fed on the fiction of having to jack rates to slow inflation down, you know which way they will vote.
Inflation today is a myth. It is driven by corporate profiteers.
And, unfortunately, further Federal Reserve rate increases will most likely drive a new recession as debt accumulates and consumer confidence decreases.
(Liz Amsden is an activist from Northeast Los Angeles with opinions on much of what goes on in our lives. She has written extensively on the City's budget and services as well as her many other interests and passions. In her real life she works on budgets for film and television where fiction can rarely be as strange as the truth of living in today's world.)