'If the Fed continues down this path—as it has signaled it will—the economy will be plunged into a recession.'
. Every time over the last half century the Fed has raised interest rates this much and this quickly, it has caused a recession.remedy the major causes of the current inflation—huge pent-up worldwide demand from two years of pandemic, shortages of goods and services responding to that demand, Putin’s war in Ukraine, and big profitable corporations with enough pricing power to use inflation as a cover for pushing up prices even further.
The Fed assumes that price increases are being driven by wage increases—so-called “wage-price inflation.” That’s incorrect. Wages areinflation. A more accurate description of what we’re now seeing might be called “profit-price inflation”—prices driven upward by corporations seeking increased profits.
A recession will be especially harmful to people who are most vulnerable to downturns in the economy—who are the first to be fired : lower-wage workers, disproportionately women and people of color. , is the Chancellor’s Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies.
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