Federal Reserve Chair: Ordinary People Will Need to Suffer to Combat Inflation

Image source: Brookings Institution

Each year, there is a tradition within the United States’ capitalist system where dozens of central bankers, economists, and policymakers meet in Jackson Hole, Wyoming for an economic summit. At this meeting, these individuals discuss the state of the capitalist economy and different strategies to optimize its functioning in the interests of the ruling class.

Each time, it is highlighted by a keynote speech by the Federal Reserve Chairman who outlines his view on the economy.

This year, in response to the rapid inflation that their system has caused, Federal Reserve Chair Jerome Powell did not hide how the capitalist class thinks inflation should be tackled. In his keynote address, he was quoted as saying:

Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance. Reducing inflation is likely to require a sustained period of below-trend growth.

Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.

This quote lays bare the policy of capitalists in response to inflation. Although the functioning of their system has led to a global inflation crisis (fed by other capitalist-caused crises such as the COVID-19 pandemic and the war in Ukraine), their policy is to make ordinary working people suffer to reduce inflation.

It is not enough that working people have had to endure extraordinary price hikes on their basic needs like food and fuel; now Powell says workers can expect increased interest rates on loans and a greater risk of losing their jobs as layoffs will hit certain sections of the economy.

Workers do all the work to make society run. We shouldn’t suffer the consequences of a chaotic economic system run in the interests of an elite minority.