There is no better place in society to look to see how the power elite rig the economic system than the Federal Reserve. And the best example of this is the way that most people have been entirely brainwashed into self-oppressing regarding monetary policy. Ask anyone which they think is better: a strong dollar or a weak dollar? Unless they know economics, they will say a strong dollar. Yet it is a weak dollar that that is good for workers. It is a weak dollar that makes our exports competitive. The strong dollar is primarily a prize only to people who already have a lot of money — not for people who have to work each week to pay the bills.
So all the time, on CNBC and Fox Business, you will hear people worrying about inflation. Actually, you will hear that same thing pretty much everywhere else. We can’t have inflation! That would reduce the value of the dollar! That might encourage the business community to stop sitting on piles of money and invest instead! They might be forced to hire some unemployed Americans! We can’t have that, now, can we?! Of course, inflation and a strong dollar are not exactly the same thing, but they are related and they both affect how well workers do. And the two things that are constantly pushed — a strong dollar and low inflation — are bad for workers.
Given all this, I was intrigued to see a Ben Leubsdorf article at The Wall Street Journal, US Inflation Undershoots Fed’s 2% Target for 37th Consecutive Month. The Federal Reserve has decided that it should keep inflation right at 2%. So that ought to mean that sometimes it is above and sometimes it is below. But it’s now been over three years and the Fed has managed to keep it under that value without error. I can assure you this: if the Fed kept the inflation rate 0.5 percentage points above 2% for three years, you would see heads exploding on CNBC.
And even the 2% inflation target is a joke. Jeff Madrick in his book Seven Bad Ideas, explained that this target was pretty much made up out of whole cloth by Alan Greenspan. “Persuasive studies find that only annual rates of inflation into the double digits affect economic growth.” But we have the 2% inflation target — not because everyone thinks Greenspan is a genius — but because it is good for the power elite.
Do you know what the core inflation was during the 1980s? It was 4%. That was considered reasonable. But over time, the tax rates that are considered reasonable for the rich to pay go down and down. And the inflation rate that the rich are expected to face goes down and down. It’s a feedback. The more policy changes to enrich the power elite, the more money they have to buy further policy changes that will enrich them. We still commonly see conservative plans to cut the top marginal tax rate down to 25%. We don’t hear much about cutting the Fed’s inflation target down. But it isn’t really necessary, since the Fed seems afraid to ever get much above it, and has no problem coasting way below it. The power elite know the Fed does its bidding: 37 straight months!