EdRitchotteSrDec 16, 2022
Robert Reich

Why is the Fed putting the onus of fighting inflation on workers and consumers rather than on the corporations largely responsible for driving up prices — and padding profit margins?

This is wrong. It's bad economics. It’s insane politics. And it’s profoundly unfair.

Dec 16, 2022 at 6:36pmWeb
Show threadPatty Dixon 🇺🇲🇺🇦Dec 16, 2022
@rbreich And, as a worker bee, it’s just scary.
Show threadAlex KDec 16, 2022
@rbreich
Naive question: What tools does the Federal Reserve have to hold corporations padding profit margins accountable?
Show threadJames WellsDec 16, 2022
@dosemakestoxin @rbreich
Not a naive question at all and is in fact the single most important question? I have seen people hem and haw over answers, but every single one of them has been nothing more than a veiled way to again put the onus on the low and middle class.
Show threadAlex KDec 16, 2022

@nikatjef @rbreich

Thanks for your response. I am similarly coming up empty here but I am open to some interpretations of the Fed's powers here. My general understanding is that they basically have very broad levers to manage the economy.

It seems to me an act of Congress would be a more targeted approach but I am far from an expert of this subject.

Show threadBathmanDec 16, 2022
@dosemakestoxin @rbreich I am not sure that the Fed has any other tools do they? I’ve always understood that moderating thr interest rate was their only function…?
Show threadivanhoekDec 16, 2022
@rbreich I don’t believe the fed can do much about corporate profits. Do they even have a tool that can do that? They don’t levy or collect taxes, they can’t confiscate profits etc
Show threadCathie GrimmDec 16, 2022
@rbreich yes yes yes!!
Show threadFactpipe, PolitiPipeDec 16, 2022
@rbreich Do either of the Feds "dual mandates" take into consideration fairness?
Show threadRazorRamonDec 16, 2022
@rbreich Republicans are a pack of hypocrites. They lobby for big oil. They make money by the boat loads. These American patriotic companies pass on the cost to us all. I want these churches who have so much to say about our politics to start paying taxes like the rest of us.
Show threadMatthew Darling Dec 16, 2022
@rbreich Not clear to me that this is true - see this post by @aaronsojourner https://econtwitter.net/@aaronsojourner/109524785524661418
Aaron Sojourner (@[email protected])

The price of Fed action to fight inflation has so far been paid mostly by wealthier Americans whose assets in stocks, crypto, & elsewhere deflated. If Fed causes employers to start destroying jobs in the real economy, the price burden will shift dramatically.

Econ (Twitter) Mastodon
Show threadJoeyFulanitoDec 16, 2022

@besttrousers @rbreich @aaronsojourner

It may be true but here's the catch:

All that "price paid" by the 0.1% was in depreciation of speculative assets, which as long as they don't panic sell it won't translate to real losses. Those assets can bounce back at the blink of an eye depending how investors feel about their breakfast that morning.

It's not fair comparison that if One "lost" 8% of 1B to I gained 18% of my 45k salary. One still has over 900 M while the other barely moves over 50k.

Show threadAaron SojournerDec 16, 2022

@Joeyfulanito @besttrousers @rbreich

Yeah, that's real. My point is that price stability via reduced demand from concentrated wealth > via reduced labor income for working Americans.

Show threadNach*Dec 16, 2022
@rbreich when democracy becomes "democracy", as in corporate interests pumping money into politicians to have things go their way, it's what happens.
Show threadTerryHasAnOpinionDec 16, 2022
@rbreich what specifically should they do?
Show threadRainbowBodyDec 16, 2022

@Terrysagirl @rbreich

The dual mandate is wage suppression and asset inflation.

They are excellent at that

Show threadTerryHasAnOpinionDec 16, 2022
@RainbowBody @rbreich How does the Fed do that?
Show threadRainbowBodyDec 17, 2022

@Terrysagirl @rbreich

Constant money creation supports asset values.
Anytime there is a hint of wage inflation they raise interest rates.

Show threadTerryHasAnOpinionDec 17, 2022
@RainbowBody @rbreich what other methods would you have them use? Or what would Mr, Reich suggest they do to put the onus on the corporations? What tool is at their disposal?
Show threadRainbowBodyDec 17, 2022

@Terrysagirl @rbreich

Not inflating assets
And allowing wage growth

Show threadTerryHasAnOpinionDec 18, 2022
@RainbowBody how are they keeping that from happening? I'm not arguing, just trying to understand what real actions they have at their disposal.
Show threadRainbowBodyDec 18, 2022

@Terrysagirl

My monetary policy professor, an ex fed, explained it this way. You have money supply and interest rates. You peg/control one and let the other float. If you don't, and play both sides it goes to shit.

They jacked money supply and suppressed rates to negative/zero.

The inflation had to happen and it was entirely into assets (real estate, equities.) As soon as any wage pressure they crush it.

I was in this econ class in 1989.

Show threadRainbowBodyDec 18, 2022

@Terrysagirl

This was effective and horrible policy and tied to tax policy as well.

Show threadMyMiloCat+MydogNoodlesDec 16, 2022
@rbreich Do not get me started, but when do the workers get justice? When we rise en masse, all at once, define our power and USE it! There's no will for a 24 hour real general strike, not in my lifetime, I fear.
Show threadCubs_2016WSDec 17, 2022
@LeslieVS1965 @rbreich
The wage gap between the working poor (us) and the rich continues to widen.
If everybody would call in sick and stay away from spending one dime (walmart, target, gas stations, etc) for 24 hours, that would send a message.
Show threadchriszanfDec 16, 2022

@rbreich Because they love socialism as much as they love capitalism!

They love socialising debt and privatising profits!

Show threadDaftAmyDec 16, 2022
@rbreich Indeed!
Show threadmsgbiDec 16, 2022
@rbreich @aloa5 @charles_ex
Show threadBobrDec 16, 2022
@rbreich Everyone with half a brain knows that the US economy is driven by consumer spending and yet the government and business actors do everything in their power to destroy this segment of the economy - high consumer interest rates; corporate handouts and tax rebates; disparaging programs that put real dollars in the hands of those who will immediately spend same (low and moderate income workers). It’s almost like that want they want the economy to fail!
Show threadPatrick GillamDec 16, 2022
@rbreich
Demand-side austerity to fix supply-side dysfunction.
Show threadSteve PopovichDec 16, 2022
@rbreich because corporations run the government. That's where the campaign contributions come from, and it's all pay-to-plsy.
Show threadPennyAK1Dec 16, 2022
@rbreich I don't think the Fed has any OTHER tools. All they can do is raise interest rates. They are a "one trick pony." Other government agencies, and lthe egislative branch, need to step in.
Show threadKrazyKatDec 16, 2022
@rbreich Because the United States was founded on slavery — and that model persists to this day.
Show threadCorvis13thDec 16, 2022
@rbreich
For years I've heard Americans aren't spending enough. Then I hear Americans aren't saving enough (accounts and retirement) It can't be both.
Show threadtimeline191Dec 16, 2022
@rbreich. how can the Fed address corporate profits? They would need to push for congressional action
Show threadJulian3bDec 16, 2022
@rbreich can’t blame Elon Musk he just made Tesla lose a few billion dollars and made money disappear without the fed involved, that should help inflation
Show threadAnth01ogyDec 16, 2022
@rbreich Do you not believe that inflation can be attributed at least in part to increase in real demand?
Show threadsmgbaltDec 16, 2022
@rbreich because they do not have the tools or authority to address the legitimate issue you raise.
Show threadNicholas 🏳️‍🌈🇮🇹🇺🇦Dec 16, 2022
@rbreich Seems like corporations are using inflation as an excuse to collect in two bad years of profits during Covid. At least for some corporations.
Show threadKeith GoodeDec 16, 2022
@rbreich A person with only a hammer thinks everything is a nail. Powell's only tool is an interest rate hike.
Show threadSaint EddieDec 16, 2022
@rbreich agreed. but doesn’t the rate affect them as well?
Show threadKris SamselDec 16, 2022
@rbreich Trump appointed Fed Chair? Should have been replaced by Biden.
It’s not a permanent position.
Show threadTD SeipelDec 16, 2022
@rbreich it’s called free enterprise, if you don’t like the price, don’t buy it and the price will come down.
Show threadTransitBikerDec 16, 2022
@rbreich once again you’re correct.
Show threadVirtualReality4MeDec 16, 2022
@rbreich the slaves are always the ones punished not the masters.
Show threadgregblonderDec 16, 2022
@rbreich I agree the FED is a blunt instrument. There are more wholistic alternatives, but Washington is afraid to act because they are afraid of blame. I have a few suggestions here which spread the pain, protect the bottom 20%, and prepare us for a recovery https://genuineideas.com/ArticlesIndex/FEDup.html
FED UP

Show threadPatricia Tervo-MooreDec 16, 2022
@rbreich I agree. Do they not know the mass amount of retail and service industries that are struggling right now? 🤔
Show threadLou KatzDec 16, 2022
@rbreich The unfairness is the aim.
Show threadAT-AT Assault 🏳️‍⚧️Dec 19, 2022
@rbreich "Everything is more expensive. And we need you to take a paycut to reduce inflation, so you won't have as much money to buy things, in a system that depends on people buying things. Wait..."
Show threadJane DeauxDec 22, 2022
@rbreich Nailed it!
Show threadStr8ngerDec 30, 2022
@rbreich
Show threadStr8ngerDec 30, 2022

@rbreich More appropriate question IMHO is, why didn’t the Fed increase interest rates when the stock & housing markets were sky high?

A better question is, why did FAKE A$$ #populist RepubliCON$ vote against price gauging & every other bills that would help the #RealAmericans they pretend to be fighting for.

#NeverForget #NeverForgive #VoteOutEveryRepubliCON