Next federal reserve meeting 20238/11/2023 No one would argue that an unemployed person is in a better position to combat inflation than someone with a job. Stewart countered Summers and asked if it is working class people that are being harmed the most by inflation, why it made sense to address the problem by “ throw ten million of them out of work, so we don’t all have to share in that burden.” Summers may want to use the economic pain of working-class people dealing with inflation as a reason to support rate hikes, but if those same people are the ones losing their jobs, it is hard to argue that they are better off. The subtext of the argument being, so long as up to sixteen million workers are ripped from the labor market, aggregate demand by households will fall, and firms will be forced to bring down prices. Last year, MarketWatch reported on a speech delivered by Summers where he argued that get inflation back under two percent, the US economy would need to see unemployment rise to ten percent for one year, 7.5 percent for two years, or six percent for five years. Summers responded that “if you talk to African American voters, Hispanic voters, voters without a college degree, they regard the country’s biggest problem as having to do with inflation.” In other words, since inflation hurts those with the lowest incomes, it should be the Fed’s main priority to stabilize prices, even if that leads to job losses. During an interview with former Treasury Secretary Larry Summers, satirist Jon Stewart asked why it was that rates needed to be raised to a level that threatened the jobs of working-class people. The second option has support from a broad set of actors - economist Joseph Stiglitz, Senator Elizabeth Warren, and comedian Jon Stewart- and as the impacts of the bank collapse begin to be felt, the contingency is growing.Ĭhair Powell has said that the central bank expects labor market conditions to soften as rates are pushed up, which could lead to millions losing their jobs. Now, the Fed must decide whether they want to continue to push up interest rates under conditions of widespread uncertainty or take a more ‘wait and see’ approach. The impact of the SVB collapse on the Fed’s decision to increase interest ratesĪccording to Barron’s, many of the factors that aligned to cause the run on Silicon Valley Bank wouldn’t have been possible without the Fed’s rate increases.
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