There is no question that inflation hurts low-income people. As cutbacks emerge to reducing food subsidies, more people than ever patronize food pantries.
Distributions are higher than ever at the Southern Appalachian Labor School pantries in Fayette County, now designated by the Appalachian Regional Commission as a “distressed” county. Furthermore, with less money and higher prices, not buying food that is nutritious has become a serious health issue.
Poor Americans face other priority problems, as well, such as in the housing market. Institutional investors seeking more profits are purchasing mobile home parks and rental houses, forcing people to live unsafely with doubled rents in dilapidated houses or on the street.
Jerome Powell is focused on fighting inflation one way. He subscribed to the classic argument that inflation is solely caused by too many dollars earned by the wage earners chasing too few goods. In one year, interest rates have skyrocketed 450 basis points, a factor that has contributed to a rash of bank failures domestically and overseas. Yet, at the same time, released data proudly proclaims an increase in employment and a decrease in the official unemployment rate. This news, however, is not what Powell wants to hear.
To control inflation, the Federal Reserve aims to increase unemployment, slow job openings and raise housing costs. This realization would put a lid on “demand” and lower consumer purchasing power, creating a recession.
Powell does not care about the billionaires who increased their wealth substantially during the pandemic. How else could Elon Musk decide to build a brand-new city for himself in Texas on thousands of acres?
In addition, Powell wants to hurt demand by those at the bottom and turn a blind eye at other options. One other option, successfully used by Franklin Roosevelt during World War II, is price controls on essential goods. As noted in The Wall Street Journal, companies exempt from controls gleefully raise prices on essential foods more than cost increases simply because they can seize the opportunity to get away with it and increase profits. Powell is not bothered by these facts and has a myopic view that, until official unemployment rates rise and wage hikes stop, interest rate hikes are the only solution to inflation.
It is not coincidental that wage hikes are under attack in various ways. They already fall behind the rate of inflation, according to recently released data. Furthermore, states are now seeking to weaken child labor laws, so children can work more cheaply than adults. This is reminiscent to when breaker boys sorted coal in the mines and girls operated knitting machines in the textile industry. To make matters worse, evidence has emerged that young immigrant children are recruited and employed “under the table” in numerous factories. These spreading activities, greatly ignored, have the effect of achieving the Federal Reserve’s desire of lowering wages and earnings.
Inflation is exasperated by those who benefit from the economic system to not pay for their privileges. The economic pie is now obscenely divided. Somehow, by grabbing control of the means of production, subjugation or manipulating taxes to protect ill-gotten gains, the rich became obscenely richer and cleverly designed policies to protect, increase and secure their wealth. An example is the 2018 disastrous decision by Donald Trump and the GOP Congress to rollback the Dodd-Frank financial reform act, due to personal lobbying by the head of the recently failed Silicon Valley Bank, which flourished since then, until now.
The time has come for fairness and economic justice to prevail. It is time to look at other ways to fight inflation and take another look at what is really happening to whom.
John David is a Gazette-Mail contributing columnist.