The October 2021 rate of inflation in America hit a 30-year high of 6.2%. A year earlier, it was only 1.37%. Americans are paying more for heating fuel, food, rent, gasoline, cars and every other necessity. Inflation is hitting the poor and the middle class the hardest. Yet in the midst of such misfortune, Jerome Powell, Chair of the Federal Reserve, and President Joe Biden refuse to address the problem. The Federal Reserve has intentionally kept interest rates (the cost of borrowing) near zero for the past several years. Such a policy is unrealistic, as everything has a cost. This deliberate government intervention is now fueling inflation with no end in sight. At the same time consumers and businesses as well as governments are taking on massive amounts of debt.
Jerome Powell believes that the higher interest rates are caused by disruptions in the global supply chain. This belief, however, does not explain why some cities are experiencing huge increases in real estate costs, sometimes as much as 18% in one month. Consumers are being lured into paying higher costs with the promise of cheap mortgage interest rates. Many of these consumers are even getting into bidding wars as they take on massive debt. Higher real estate costs in turn are increasing rental costs which is pushing more Americans into homelessness. The average American’s dream of owning one’s own home (at a reasonable cost) is now farther away than ever before!
The Federal Reserve also justifies its interest rate inaction by claiming that it’s necessary to maximize employment. The policy of cheap interest rates has been used for years, yet as of October 2021, 7.4 million Americans are still unemployed.
Apparently, Jerome Powell is very well liked by Wall Street. That alone should make one suspicious of his competence in serving the needs of middle-class America. By February 2022, President Joe Biden has to decide whether or not to reappoint Jerome Powell. With an approval rating that has hit a new low of 38%, Joe Biden should consider whose interests he wants to serve: Wall Street or middle-class America!