Robert Reich Says Fed Putting Onus Of Fighting Inflation On Wrong Group: 'It's Bad Economics ... Insane Politics'

Zinger Key Points
  • Reich argues despite seven straight increases in nine months, price increases are still hovering near four-decade highs.
  • His comments follow a lower-than-expected inflation figure for November at 7.1% as against the estimated 7.3%.
  • The Former Secretary of Labor believes that domestic inflation is being driven by profits and not wages.

Former Secretary of Labor Robert Reich believes the Federal Reserve’s rate hikes are not working and said the central bank should stop believing it can easily stop profit-price inflation by hiking interest rates.

In his article titled “The Fed is Dead” on Substack platform, Reich argues that despite seven straight increases in just nine months — a pace not seen since the Fed’s inflation fight in the 1980s — price increases are still hovering near four-decade highs.

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Reich’s comments follow a lower-than-expected inflation figure for November at 7.1% as against the estimated 7.3%. Major Wall Street indices ended Tuesday’s session in the green with the SPDR S&P 500 ETF Trust SPY closing 0.76% higher while the Vanguard Total Bond Market Index Fund ETF BND closing 0.68% higher.

Reich believes that domestic inflation is being driven by profits and not wages. “And interest rate hikes don’t reduce profit-driven inflation — at least not directly. Instead, workers and consumers take the hit,” he said.

Onus on Workers: The Berkeley Professor noted that corporate profits surged to a record high of $2.08 trillion in the third quarter of this year, even as inflation continued to squeeze workers and consumers. Executives of big companies across America continue to tell Wall Street they can keep prices high or raise them even higher, he said.

Reich further stated that the Federal Reserve should pause interest-rate hikes long enough to see — and allow the nation to see — they are harming workers and consumers more than corporations that continue to rake in record profits.

It’s important that Americans know the truth, he said adding that seven Fed rate hikes in just nine months have barely dented corporate power to raise prices and profit margins.

“Which is why the Fed is putting the onus of fighting inflation on workers and consumers rather than on the corporations responsible for it. This is wrong. It’s bad economics. It’s insane politics. And it’s profoundly unfair,” he said.

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