By Chris Fry
On September 13, the Bureau of Labor Statistics announced that the Consumer Price Index (CPI), the standard measure for inflation, showed that prices year-to-year rose 8.3 percent in August. As a New York Times article reported that day:
The disappointing data came even as falling gas prices pulled inflation lower, with rapidly rising costs for rent, health care, restaurant meals and goods such as furniture offsetting the relief consumers were feeling at the fuel pump.
Compounding the bad news, a core index that strips out gas and food to get a sense of underlying inflation trends accelerated by more than was expected.
For policymakers at the Federal Reserve, who have been raising interest rates to slow the economy and try to tame recent rapid inflation, the report was a fresh sign that continued aggressive action may be needed to wrestle them lower.
Ah yes. The Federal Reserve’s “solution” to inflation is to continue to hike interest rates, to force millions out of work, to frighten those of us who still have our jobs so much that we will not demand higher pay or benefits or organize a union. From home mortgage to student loans, from rents to credit card interest, they scheme to bury the working class in debt.
Witness the attacks on Biden’s far too modest student loan relief proposal. Politicians from both parties attack it as inflationary and an “unfair handout” to young people, particularly people of color, struggling to pay off these huge debts that threaten to impoverish them for the rest of their lives.
Unelected Fed Chairman Jerome Powell and the Federal Reserve are the “central committee” of U.S. capitalism. As we can see, they have far more power than any politician, including Biden. As the bloated corporate and banking parasites, with their increased monopoly power, continue to raise prices and erode our families’ standard of living, these top bankers are now ready to impose a harsh regimen of austerity on the workers and oppressed communities so they can sustain their profit streams.
In actuality, the Federal Reserve’s interest rate hikes to deliberately raise the unemployment rate, are illegal:
[I]n January 1978 the Full Employment and Balanced Growth Act, better known as the Humphrey-Hawkins Act, amended the Employment Act of 1946 and was signed into law by President Carter. The Humphrey-Hawkins Act contained numerous objectives. Among them, unemployment should not exceed 3 percent for people 20 years or older, and inflation should be reduced to 3 percent or less, provided that its reduction would not interfere with the employment goal.
The workers and oppressed are certainly within their rights to fight to put our jobs, our families, our welfare ahead of the banks and giant monopolies that are feasting off of the sky-high prices they are imposing on us. We can stop the corrupt Federal Reserve from implementing austerity.
Progressives in Congress provide an alternative
On August 5th, a bill was introduced in Congress, co-sponsored by 20 members, most of whom are members of the progressive “Squad”. It is titled “The Emergency Price Stabilization Act of 2022”. Its goals are:
(1) in response to global economic disruptions, including those related to the COVID–19 pandemic, and in anticipation of future disruptions caused by climate change and other factors, the Federal Government requires additional tools to protect residents of the United States from price shocks and profiteering; and
(2) as one such tool, the Federal Government should build the capacity to establish limits on the growth of certain prices, and to otherwise strategically regulate such prices, in order to stabilize the cost of essential goods and services.
The bill establishes a “Sub-Task Force on Emergency Price Stabilization”, which is empowered to:
(1) Monitor the price of certain goods and services, including in the following categories:
(D) Health care.
(F) Any price from the list of strategically important prices described in paragraph (2) as the Sub-Task Force determines appropriate.
(2) Establish a list of strategically important prices that are of critical importance to the health, safety, economic security, or well-being of residents of the United States and update such list (based on changing economic conditions) not later than once every 6 months.
(3) Analyze how the prices described in paragraph (1) are impacted by disruptions to supply chains, including those related to the COVID–19 pandemic and similar threats to public health, climate-driven disasters and extreme weather events, and geopolitical conflict, and by other disruptive, distortive, speculative, or unusual conditions and practices that may be related to the increases described in paragraph (5).
(4) Investigate, including in relation to the disruptions described in paragraph (3), the costs, profits, price-setting and investment decisions, and other relevant indicators and practices of economically significant entities, especially large corporations, that exercise disproportionate pricing power over the prices described in paragraph (1).
(5) Determine when any such economically significant entity has acted to raise or maintain a price described in paragraph (1)—
(A) to exceed corresponding increases in per-unit input and labor costs, or despite such costs that are falling; or
(B) to an extent that is not economically necessary, including when such cost increases could reasonably be absorbed in whole or in part by the economically significant entity.
(6) Inform the President and Congress, in a prompt manner that is made available to the public on an appropriate website, if the increases described in paragraph (5) are widespread or burdensome such that action by the Federal Government is warranted to protect residents of the United States and the economy of the United States, including when such increases are related to inflation.
(7) Make actionable recommendations, including quantitatively specific recommendations as appropriate, to the President on how to address the increases described in paragraph (5), including the following:
(A) Targeted price controls and regulations to—
(i) establish limits on the growth of the prices of goods and services; and
(ii) reduce volatility and promote stability of such prices.
(B) Any other concurrent or subsequent action as the Sub-Task Force determines appropriate to ensure successful and equitable implementation of such targeted price controls and regulations, including action to do the following:
(i) Make adjustments to any enacted recommendation based on changing economic conditions.
(ii) Guarantee sufficient production and supply of impacted goods and services, including through the use of measures to reduce sectoral demand.
(iii) Promote the expansion of relevant productive capacity and, as appropriate, of stockpiles and reserves.
(iv) Ensure and verify that such targeted price controls and regulations do not lead to an increase in (and wherever possible reduce) greenhouse gas emissions or any other negative impacts on public health, the environment, and local communities.
(v) Establish conditions and requirements on firms that may benefit financially from the application of price controls and regulations to the supply chains of such firms, or that benefit from other forms of support under this Act, including requirements to pass on lower costs to consumers, contribute to sufficient production and supply of goods and services, and reduce greenhouse gas emissions and other negative impacts on public health, the environment, and local communities.
(vi) Establish price floors as appropriate, including through purchasing, procurement, and price supports by the Federal Government.
(vii) Intervene directly in commodity markets to counter speculation, including by pursuing collaboration with the Federal Reserve and pursuing international coordination to stabilize such markets.
(8) Design the recommendations in paragraph (7) by taking into account any other tool the Federal Government is authorized to use to directly prevent or counteract price-gouging, windfall profits, or other harmful practices under the purview of the Sub-Task Force, such that the recommendations of the Sub-Task Force will complement, work in tandem with, or address gaps in those tools, including by providing faster-acting mechanisms where necessary to achieve the goals of this Act.
(9) Report to the Advisory Board on the actionable recommendations described in paragraph (7) that the Advisory Board advises the Sub-Task Force on pursuant to subsection (f)(3)(B). The Sub-Task Force shall make every effort to make recommendations that are approved by the majority of the Advisory Board.
The Advisory Board described in Section 9 shall consist of:
(A) Representation of academic economists, historians, sociologists, or others with relevant expertise who have produced scholarship or public policy work regarding how price or profit controls have been, or can be, administered effectively.
(B) Representation of academic or public policy experts who specialize in subject matter areas relevant to the matters described in this Act, including public health, food systems, housing, and climate change.
(C) Equal representation of labor organizations, small business associations, and consumer or tenant advocacy organizations.
Revolutionary alternative: Peoples Price Controls
The “Squad’s” proposal, however commendable, faces a stone wall in Congress and the White House, corruptly controlled entirely by corporate lobbyists representing the capitalist ruling class. And its “emergency” nature means that it is being proposed as only a temporary measure rather than a permanent legal framework for the working class and oppressed to take control of prices. And it does not explicitly stop the Federal Reserve from carrying out its austerity measures.
But it does provide a legal framework for our class to take up this struggle, to take this kind of proposal to the union halls, community meetings, city and town halls, and to the streets. It reinforces our fight against the blatantly illegal Federal Reserve rate hikes designed to impoverish the workers and oppressed,
We are the producers of all wealth. The capitalist class that appropriates the wealth that we produce have so centralized their control of the economy that they are no longer restrained by any “competition”. Instead of developers, they are parasites that do not deserve to control the economy and government, nor can our class afford to continue to have them do it.
Now is the time to present to our class a fighting strategy to reverse the course of this imminent calamity that we face.
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