What’s behind the Fed’s decision to temporarily halt rate hikes this past week? Fed policy faces a contradiction: raise rates and worsen banking system instability (which the Fed has been offsetting with weekly injections of $95B to stabilize since March), or not raise interest rates for a while and live with inflation. Dr. Rasmus explains the Fed is more concerned in the short run with exacerbating the continuing regional banking crisis than intensifying efforts to slow inflation by raising rates. Dr, Rasmus explains how and why monetary policy faces growing contradictions and is becoming increasingly ‘inefficient’ (i.e. high rates don’t reduce inflation as effectively as in times past, while lowering rates to zero have less affect on stimulating the economy as well). The causes are late neoliberal capitalism’s globalization and financialization.
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