Surging gas prices and sky-high mortgages and rent sent inflation rising more than expected in March, adding to Americans’ prolonged and painful battle with high costs. That could force the Federal Reserve to keep its punishing rates higher for longer.
Legitimately, how do they fix this? Like what options are there?
When it’s a feature and not a bug, you don’t “fix” it, it is working exactly as planned.
In the first paragraph the article all but prompts the Fed to jack up interest rates, which makes borrowing money more expensive and when employers don’t borrow or spend on payroll, the result is more people lose jobs and when fewer people have money, in theory that should reduce upward demand pressure on consumer goods prices. In short, jacking up interest rates is the Fed’s way of prompting layoffs and wage cuts- by making working people poorer. They’ve been doing this very effectively to keep wages under control, so much so that even when ‘inflation’ like this is just price gouging it’s the first thing Wall Street wants to hear.
Of course, this ‘interest rates fight inflation’ mantra assumes that the inflation is really caused by too much money out there competing to buy too few goods and services, but when it’s the result of price collusion or just price gouging, it means prices for things went up and wages just went down. (and that in turn makes Wall Street fat and happy)
In the case of real estate, it’s been established that real estate commissions (and prices) have been inflated due to price collusion among realtor groups- in the case of rents, there is a lawsuit over price collusion driving rents up.
When it comes to gas prices, that’s less likely to be price gouging but it is very likely to be the consequence of supply/production decisions made with politics in mind, by people that probably stand to gain politically if voters vote against the incumbent.
When it’s a feature and not a bug, you don’t “fix” it, it is working exactly as planned.
In the first paragraph the article all but prompts the Fed to jack up interest rates, which makes borrowing money more expensive and when employers don’t borrow or spend on payroll, the result is more people lose jobs and when fewer people have money, in theory that should reduce upward demand pressure on consumer goods prices. In short, jacking up interest rates is the Fed’s way of prompting layoffs and wage cuts- by making working people poorer. They’ve been doing this very effectively to keep wages under control, so much so that even when ‘inflation’ like this is just price gouging it’s the first thing Wall Street wants to hear.
Of course, this ‘interest rates fight inflation’ mantra assumes that the inflation is really caused by too much money out there competing to buy too few goods and services, but when it’s the result of price collusion or just price gouging, it means prices for things went up and wages just went down. (and that in turn makes Wall Street fat and happy)
In the case of real estate, it’s been established that real estate commissions (and prices) have been inflated due to price collusion among realtor groups- in the case of rents, there is a lawsuit over price collusion driving rents up.
When it comes to gas prices, that’s less likely to be price gouging but it is very likely to be the consequence of supply/production decisions made with politics in mind, by people that probably stand to gain politically if voters vote against the incumbent.