Comment by ZoomerCretin

1 year ago

That's a feature, not a bug.

The government reaction to the 2021 economic circumstances was to counter the hot job market, not inflation. It is explicitly and legally the mandate of the federal reserve to target maximum employment first, and 3% inflation if possible.

Inflation has been normal for a while now by most metrics, but rates are still sky-high to crush worker power. This may not be the stated goal, but it is the actual outcome we can see.

The purpose of a system is what it does.

Super-low inflation targets hurt worker negotiating power.

1 comment

ZoomerCretin

tiahura 1 year ago

The relevant section of the U.S. Code is 12 U.S.C. § 225a, which states:

    "The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."

The reason rates are staying high is because of the expectations game. The US had unfathomable price stability for decades. The fed realizes that the inflation genie is out of the bottle. The only way to get it back in is to overcompensate by raising rates and leaving them high until people forget about 10% inflation.