this post was submitted on 27 Jun 2023
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Sounds coherent. Would you say there are any effective tools to counter that problem? I wonder what the central banks can do at the moment, because it seems they are kind of in a deadlock regarding the control of inflation.
My personal opinion for the current situation would be to keep rates where they are to avoid further wage suppression. Let the PPP money and COVID impacts move through the economic system without increasing the cost of borrowing further. A statement by the IMF and/or Fed directly admitting that the current inflationary trend is due to corporate profiteering, not wage growth, could prompt stricter price controls and regulation across multiple governments. In a perfect world, this would result in criminal cases and prosecutions of the worst offenders (I'm looking at you, egg producers), but I think we all know that's not going to happen.
My feeling is that the economy really just needs some breathing room to be robust enough to deal with the next climate and/or political crisis. Raising rates feels like a self-inflicted wound meant to shore up the profits of those who made out like bandits during COVID at the expense of everyone else who was just barely making it through.