# I lost my hat and sunglasses — why the rich should call off Jerome Powell Date: 2024-08-26 --- --- ### I lost my hat and sunglasses — why the rich should call off Jerome Powell Jerome Powell raised interest rates to bust unions and prevent workers from standing up to their employers. If that statement is obvious to you then skip down to the next section. [**Great Resignation - Wikipedia** *The Great Resignation, also known as the Big Quit and the Great Reshuffle, was a mainly American economic trend in…*en.wikipedia.org](https://en.wikipedia.org/wiki/Great_Resignation#/media/File:Quits_in_United_States_%28from_2012%29.svg "https://en.wikipedia.org/wiki/Great_Resignation#/media/File:Quits_in_United_States_(from_2012).svg") ![People quitting their jobs](https://disrael.github.io/blogs/assets/i-lost-my-hat-and-sunglasses-why-the-rich-should-call-off-jerome-powell-c76f5b145d.png) *People quitting their jobs* ![Interest rate hikes](https://disrael.github.io/blogs/assets/i-lost-my-hat-and-sunglasses-why-the-rich-should-call-off-jerome-powell-f3ec245293.png) *Interest rate hikes* ![Image](https://disrael.github.io/blogs/assets/i-lost-my-hat-and-sunglasses-why-the-rich-should-call-off-jerome-powell-fbd3daba07.png) I know you have been told that the fed has a “dual mandate” to control inflation and employment levels. No that’s simply not true — they only have permission to “maintain long run growth” for “long run potential”. > 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. Dramatically hiking interest rates over a very short period and then reducing them again has nothing to do with the long run. It’s austerity shock therapy that says “get back to work”. Nor does the fed have any means at all to reasonably control inflation. **You cannot “cure” the pain of inflation by contracting the money supply to deliberately cause the pain of unemployment.** That idea is as idiotic as an anesthesiologist claiming he will cure your headache by smashing your toe. Austerity is a very old system introduced in England and Italy after world war one to prevent workers that saw normal capitalism cease during the war from getting uppity. Similarly Covid introduced direct payments to workers that caused them to reconsider their class status. Austerity had two components — bailouts for corporations and the rich and tight money for workers. Jerome Powell is not in charge of the bailouts but he is a political appointee (just as our supreme court now is) responsible for enforcing a money supply that serves the savings class. #### Why the rich should call off Jerome Powell “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” — Warren Buffet. The problem with “winning” the class war is that rich people still have to live on the same planet with the people they are defeating. They might accidentally leave their old hat and prescription sunglasses in a restaurant and not get them back purely out of spite. They can pay to have doctors fawn over them but still end up having their life depend on the good graces of some nurse. They could be driven around in fully autonomous vehicles and get cones placed in front of the car to sabotage it. On top of these mean world consequences, humans reproducing and avoiding environmental destruction requires a functioning society and institutions that work. Plus there is the constant threat of pyrrhic victory and a descent into a fascism that upends wealth as we know it. Still how can winners of the class war realize they’ve gone too far? Why should they not wait for the [peasants to take to the streets](https://apnews.com/article/argentina-milei-libertarian-economic-overhaul-austerity-university-public-35f1c1df7826fb8be935c9acfdc6cce2)? > Raising their textbooks and diplomas and singing the national anthem, hundreds of thousands of Argentines filled the streets of Buenos Aires and other cities on Tuesday to demand increased funding for the country’s public universities, in an outpouring of anger at libertarian President Javier Milei’s harsh austerity measures. Because again austerity can’t actually cure anything and Argentina is an example of playing with fire: > Executive measures imposed so far have deepened a recession, increased poverty to 55 percent and sent annual inflation surging to 260 percent. Neoliberals are correct that America must avoid [flirting with quack economics](https://www.nytimes.com/2024/04/29/opinion/trump-economics.html) and that Trump is quack economics. Clearly though neoliberals are also quack economics: > But Biden and company didn’t pressure the Fed to hold off; they respected the Fed’s independence, letting it do what it thought was necessary to bring inflation under control. The phrase “Fed’s independence” is so insane it’s difficult even to begin discussing it. Independent of what — democracy? Is Paul Krugman, the mouthpiece of forty years of failed neoliberal economics, claiming that the fed must live in a technocratic fortress beyond all checks and balances? That economics, which is not even a science — the Nobel prize in economics is just given out by a Swedish bank that scurrilously borrowed Nobel’s name, should be given a level of blind trust unseen in human history even for Catholic popes? But to this point there is: > The Federal Reserve is a quasi-independent institution, not because of any sacrosanct constitutional principle, but because nations have found that in practice it’s important to limit partisan influence over interest rates and money creation. Ah nations like Britain which suffers the longest hit to living standards since records began. Or Japan where the fertility rate is 1.2 (where 2.1 is the number required for descendents of current Japanese citizens to continue to exist). Also in what world has partisan influence over money creation been limited? **We are on a fiat currency and our government takes full advantage of this fact.** The fed can certainly use interest rates to cause immediate worker pain and temporary worker submission but control of credit is not the same as limiting all money creation. Back to the rich though, they must keep their eye on the stability prize and the fed is no longer the horse to back. America simply cannot afford the federal reserve throwing a tantrum every time workers try to do better than living hand to mouth. The road to stability is paved with stimulus packages and a good deal of inflation as well. Rampant and growing inequality isn’t just a historic path to instability — it’s **the** historic path to instability. And what rich people need is stability even if, as happened after the great depression, it hits their pocket books a little.