How To Control Inflation

Right now the Federal Reserve continues to increase interest rates. They claim that this is how to control inflation. In fact, that does act to curb inflation. The simplest explanation of this is that increasing the interest rate means increased borrowing costs, which reduces consumption. 

There is a major problem with this. It also leads to what they claim is the risk of recession. They ignore the fact that, by economic definition, a recession occurs when GDP declines for more than two successive quarters. We already meet that definition. For most Americans, we define a recession as having increasing inflation, paying higher prices and hence a reduction in real wages over an extended period of time. We meet that definition. Most Americans completely understand that we are deep into a recession and speeding headlong into economic depression. So, that is the actual eventuality which the Federal Reserve’s actions are leading us to. 

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The other result of the Fed’s actions is that raising interest rates will lead to increasing unemployment. Not can. Will. Even for those who remain employed, it will mean decreased work hours, meaning decreased incomes. You may work more than one job and get laid off from one of them. You will still be considered employed in any of these cases, so you will not be listed as unemployed. For many, decreased hours will mean loss of employer-funded benefits. If those benefits are important to the worker, that also means increased expenses with a decreased income. 

We are told that this is necessary and that there is no other way to bring inflation down. This is false. Increasing interest rates are the only actions which the Federal Reserve can take but that makes the assumption that the president and Congress are powerless to take effective action. This is also false.

The fact is that the president and Congress have considerable power to bring inflation down. They will not take these actions. The president and every member of Congress are more beholden to corporate donors, lobbyists and the corporate structure itself, meaning they will place the welfare of corporations as their singular concern, no matter what rhetoric they may espouse. Rhetoric which will never be backed up with actions. They can tweet all day and night but they are in positions of power to do something. They will engage in performative theater against each other while effectively working together and against the well-being of the American people. They will speak of “compromise” and “bipartisanship”. Malcolm X said, “You don’t stick a knife in a man’s back 9 inches, pull it out 6 inches and say you’re making progress..” That is a partial quote but quite applicable. 

I have detailed in my economic policy proposals many ways in which inflation could be controlled by increasing real wages and consumer purchasing power. Those proposals are for permanent improvement but what about right this minute? What could be done to avert job losses and far worse inflation? 

The first thing we must understand is that increasing the interest rate has historically worked to bring down inflation. However, that is no guarantee. We were experiencing inflation before the events in Ukraine began in February which are being blamed for inflation. Rent increased by an average 25% over the past 2-3 years, with 15% of that being in the past 1 year. 

The second thing to understand is that under US federal law the ONLY priority for a corporation is the profit of shareholders. Not the primary priority, the ONLY priority. It does not matter how many or how few shareholders there are. This means that if stock prices or earnings in the form of dividends declines, that corporation will first lay off workers and reduce wages to control expenses, along with reducing quality of products, they will continue increasing prices to maintain or even accelerate profits. Those profits are paid out to shareholders via dividends. 

The third thing to understand is something I have explained in the past. Elected officials will not suffer the effects of inflation. You will pay for their income, their housing, their food, their power, their transportation, their medical care, their security and their pensions. For the rest of their lives. The only concern which they have in this game is their respective hold on power, which they consistently abuse. 

So, what could they be doing right this minute, which they will not do? Here is a list. 

Nationalize the energy sector. This would stop oil companies from decreasing production or increasing prices. It would remove not only the profit but the profit motive from increasing energy prices. 

Tie residential and small business utility expenses to income and revenue as a percentage.

Impose price caps. Richard Nixon did this in the early 70’s. I am not suggesting forcing businesses to lose money. I am not suggesting anything which would be imposed on small to medium size businesses. I am suggesting a cap on earnings on any corporation above a certain earnings level, especially any corporations which could be defined as providing essential goods and services. Food processing and production, the entire energy sector, food retailers, all forms of communication, corporate owned housing, etc. 

Enact an immediate rent freeze nationally.

Enact a freeze on firing, layoffs and wage decreases not justified by decreased production for large employers. If wage decreases are enacted, the first wages to be decreased should be corporate executives. If a reduction in hours is warranted, they should be universally distributed among all employees in an attempt to prevent layoffs. Employer provided benefits like health insurance should remain intact and at the same cost to workers. 

If wage reductions are warranted, provide mandatory federal (not state) supplemental partial unemployment to compensate for lost wages. This would be useless unless price caps are enacted concurrently. If corporations and landlords know workers receive more money, they will increase prices. This is what actually happened over the past two years. 

Enact a moratorium on banks from collecting residential mortgage payments, including commercial mortgages for small landlords in conjunction with the rent freeze. This should be done concurrently with an eviction moratorium. This would ensure that tenants have a place to live while preventing small landlords from absorbing the cost of commercial mortgage payments at a loss. Ban banks from assessing interest or late charges on mortgages during this time. The banks would not be losing anything in this process. They just would not be able to collect more. The capital balance of the mortgage would remain intact. Payments and interest could resume after the moratorium was lifted, with payment schedules adjusted accordingly to extend the length of the mortgage. This would place more money in consumers pockets, allowing for spending in the general economy, which would prevent mass job losses. This is what should have happened in 2020-2021. 

These are only a few ideas which are completely realistic. They would largely freeze GDP decline, benefit workers and consumers and prevent mass layoffs, which will definitely come with drastic consequences. Those consequences include hunger, eviction, increased homelessness, increased property and violent crime, workplace violence, increased substance abuse, unemployment insurance expenses, loss of health insurance, worsening healthcare outcomes and that is only a short list. President Biden has already declared the pandemic to be over, so there are no social limitations on large gatherings which could evolve into mobs and riots. These steps would also negate any reason to continue increasing interest rates, which will lead to higher rates of foreclosure, repossession and loan defaults while decreasing consumer spending. 

As you can see, there are many things which could be done. You will barely hear the suggestions of any of these and will absolutely not hear all of these ideas anywhere else in one place. The fact is that you are not supposed to know any of this. Our system is built from the ground up to keep you terrified and desperate. Subservient to that very same system. Just enacting any one of these ideas by themselves would lead to the entire population asking why these things have not been done before and why they cannot become permanent. That discussion must be suppressed at all cost, including the cost of potentially hundreds of thousands of lives, including your own. 

This means that you are the ones who must help me spread these ideas. You are the ones who must bring these things into discussions at every opportunity. At work, at home, on social media. My blog post is not enough. You must become involved. You are the ones who must contact elected officials with these ideas. 

If you agree with this message, share it. Help expand awareness of this campaign and these ideas. I need your help in any way you can offer it. I cannot stress enough that lives are at stake. Maybe yours, in the long term. We have to be doing this together. We have to raise awareness. None of this is going to come from those at the top whose only concern is staying at the top. Never forget that. 

It is a sad state of our current system that even a grassroots campaign like my own needs money to expand awareness. If you can afford it, please donate whatever you can to help expand this campaign. I know these are harsh times but I have no choice but to make these requests. If I could run my campaign without ever spending or receiving a single penny I would but the chances of success are almost nonexistent. I never spam anyone after they donate. If, when and how much you donate is up to you. You won’t get any emails constantly begging for more. I promise that. Donate Now!