The Fed Could Save Main Street

Rather Than Sink Main Street by Raising Interest Rates, the Fed Could Save It. Here’s How.

Inflation is plaguing consumer markets, putting pressure on the Federal Reserve to raise interest rates to tighten the money supply. But as Rex Nutting writes in a MarketWatch column titled “Why Interest Rates Aren’t Really the Right Tool to Control Inflation”:

It may be heresy to those who think the Fed is all-powerful, but the honest answer is that raising interest rates wouldn’t put out the fire. Short of throwing millions of people out of work in a recession, higher rates wouldn’t bring supply and demand back into balance, a necessary condition for price stability.

The Fed (and those who are clamoring for the Fed to raise rates immediately) have misdiagnosed the problem with the economy and are demanding the wrong kind of medicine. …

Prices are going up because crucial inputs—labor, electronics, energy, housing, transportation—are in short supply. Normally, the way to solve this imbalance would be to give workers and businesses incentives to increase their supply. …

The Fed has been assigned the job of fixing this. Unfortunately, the Fed doesn’t have the tools to do it. Monetary policy works (in theory) by tweaking demand, but it has no direct impact on supply.

The Dire Effects of the “Wrong Kind of Medicine”

— source ellenbrown.com | Ellen Brown | Feb 13, 2022

Nullius in verba


Argentina Pays Paul Singer’s “Vulture Fund” $2.4 Billion

new details have emerged about this week’s settlement between Argentina and billionaire Republican Party donor Paul Singer’s hedge fund Elliott Management. Elliott Management was one of many U.S. hedge funds to buy up Argentine debt at pennies on the dollar amid the country’s economic crisis in 2001. Former Argentine President Cristina Fernández de Kirchner had long demanded the hedge funds, which she called “vulture funds,” renegotiate the debt, arguing they were unfairly profiting off Argentina’s economic crisis. But this week, President Mauricio Macri’s right-wing government agreed to pay Singer’s fund and three others $4.65 billion. Singer’s fund itself netted $2.4 billion—10 to 15 times its original investment.

2016

Nullius in verba