Powell is determined to beat inflation by beating down wages. Only when the jobs market softens can the Fed let up. On that, pretty much everyone in the mainstream economics community and most US politicians agree.
How can labor/wage rates be a major driver of inflation while not keeping up with inflation? Also, one would think that if the inflation were that much of a problem for investors that they would be showing some sign of sharing the misery as they did when the oil embargo inflated prices in the '70s.
Back then when oil hit $100/bl the price of gas at the pump (not adjusted for inflation) was less than it was recently when oil only reached $85/bl. The "market" has seldom fared better than it has recently.
What if, instead of workers rolling over, corporations have to cut (profit) margins in order to get price increases down? How scary is that?
That simply won't happen in today's monopolized economy. The three variables of pricing for ages have been commodities/resources, labor, and profit. If any one of those increased, one, or both, of the others had to take a hit to keep prices stable.
The '08 recession created a flurry of bankruptcies and mergers that has left us with a serious lack of competition in the "free market" and that only worsened in the pandemic. Plus, Obama showed the captains of the universe that Dems were willing to let the people be thrown under the bus enmass to protect profits. He had no shortage of neoliberals in his cabinet or among those who had his ear (Biden, Summers?).
If I’m right and the causes of this bout of inflation are unorthodox and can’t be effectively treated with orthodox medicine, the coming months will be full of many more of the economic surprises that have put the world so on edge
I believe that profit is no longer a variable and now stands the test of will to be considered a constant, with only resources and labor as variables to take a hit if prices are to be stabilized. Without an active competitive market to invest in the supply chain and streamline production, commodity/resource costs are not likely to go down soon.
This will be reinforced by a neoliberal market worshiping true believer in the White House and a Congress fully owned by the oligarchy, neither of which believes in public investment beyond what minimum is necessary to keep the rabble quiet.
The Fed is no longer even trying to pretend full employment is one of its goals and is actively working to create the "soft" labor market investors wish to see. It is literally "spanking" labor for having the audacity to expect living wages from full-time work. Keeping labor in line has always been the goal of the GOP, and it now appears that neoliberal Democrats have jumped on that ship as well.
The wild card in the future might be some awakening of the cognitive ability of labor to the extent that it stops aiming at its own feet when voting, and a glimmer of some realistic econ literacy among the voting public. Either of those could give a boost to third-party candidates or simple practical changes in voting such as ranked choice and vote by mail to break up the duopoly.
