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Why is it OK to reduce inflation by creating unemployment, poverty, et al? Ask the Fed. [1]

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Date: 2023-05-06

Raising the interest rates will reduce the jobs available and increase government programs that support unemployed Americans. The Republican party is intent on cutting taxes for the rich, which cuts government support for areas other than so-called “entitlements.”

The Fed says increasing the funds rate is a measure to fight inflation, it also fights what is considered full ‘employment’, which is not everyone has a job. “The maximum level of employment is a broacrippling d-based and inclusive goal that is not directly measurable and changes over time…” that says, ‘I can’t say right now.” And you ask, “Why is economics not considered a science?””

I obviously misunderstood employment to be a good thing that powers our economy. When is reducing jobs and ability to provide for your family and meet your financial obligations a good idea? Is this why economics is not considered a science but a way of thinking, a way of telling a story? The Nobel Prize in economics does not mean economics is a science. It’s just difficult to tell the best story that fits the economic moment.

That leaves the economists to come up with more tools to control run-away inflation and run-away profits without being the source of impoverishment. That’s the “Do no harm philosophy” that has served science well. How about a novice POV? Raise taxes to lower profits and control prices. Well, that will not work politically in a capitalist economy. So, for the economy to work well, American shareholders must get more money via more profits, and simultaneously, people must be made poor at the lower rungs of the economy. That is what raising the Fed’s funds rate does; It intentionally raises unemployment.

The Bible says, “The poor will always be with us.” That is a truth proven by world history through the history of recorded governance, but does that mean we must create the poor so the middle class and the rich will survive? That is not the “Do no harm” philosophy. Maybe it should be “First intend to do no harm, but if harm is the only way for the majority…” at least that would be an honest statement of the goal of economics.

This is the goal of a market economy, according to PBS,

“Market economies tend to favor economic freedom, efficiency, and growth (with full employment being a desirable side effect of these choices) if it occurs and Americans are working that’s good, but not the goal of a market economy. Since free markets encourage competition and negotiation, other goals like equity, security, price stability, and economic sustainability are sometimes sacrificed.”

Whoa! What happened to “…establish justice, ensure domestic tranquility, … promote the general welfare, and secure the blessings of liberty to ourselves and our posterity…” somewhere in this preamble, I sense an intent of well-being for all as a high bar to reach, but a bar none-the-less; the general welfare seems to be the best possible conditions for all, ‘secure the blessings of liberty… our posterity (our future generations). Does that mean we plan to have poor people? I emphatically answer, “no.”

Prices are high and corporations are reaping record profits. People are working. The high employment rates are pushing the economy. Which solution is the correct way to “Do no harm”? Increase jobless Americans or an aggressive windfall profits tax? I vote for the latter. Of course, I’m a “Taxes is what we pay for a free society” voter.

Stop price gouging to increase profit. Sell at a price that encourages the consumer to buy more (AKA Sam Walton’s theory) and reap profits through old-fashioned “selling the best product at a reasonable price.” That increases consumer traffic, sales, and jobs, and that is a reasonable profit that benefits all economic levels.

I know there will be howling and gnashing of teeth, but intentionally creating poor people, putting people out of work, and adding people on entitlement programs, while Republicans cut entitlement programs is a recipe for hunger bordering on famine in the already poverty-stricken areas in America. In poverty, talent is ignored and/or erased. Depending more on chance exposure versus merit, education, family social nourishment, and discipline. Exposure to acceptable mores and inspirational events throughout our history is an absolute necessity. Creating poverty should not be an economic tool to reduce inflation. That is an unholy device that at its peak costs lives.

The FED should look at the real reasons why it is necessary to cool the economy by pushing people into poverty. It is Greed, running amuck.

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[1] Url: https://www.dailykos.com/stories/2023/5/6/2167844/-Why-is-it-OK-to-reduce-inflation-by-creating-unemployment-poverty-et-al-Ask-the-Fed

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