That’s what “taming inflation” means. It means cooling off the economy, which means that businesses which would otherwise be viable fail, reducing demand, reducing upward pressure on prices.
To the extent that unexpected banking issues accelerate this, within a fairly wide band, from a monetary policy perspective that just means the Fed can back off the brake pedal a little sooner.
The solution is exactly what is about to happen, a decade plus recession. But don’t worry, there is always war, which is coming.
if they increase spending, you get more inflation, and then they have to eventually pay higher rates on their own debt
if they cut spending, they can deflate the economy, and they can't attract the tax revenues to pay their own debt
no good options in a society that has OD'd on debt since the mid 90s
if we were honest, the President would go on TV and tell us we are just going to be poorer for a while, which is something most people already know anyway
This is not a serious constraint on deficit reduction.
services inflation printed at 7.3% and ur worried about deflation?
that's not a valid opinion atp. we're so far from overcorrecting its scary. spending is still up over pre corona levels. ppl still drawing down excess savings. bank crisis is a real concern and prob reads through to equivalent of a few rate hikes (slok @ apollo says 150bps, most say lower)
Disincentivize property investments in family homes.
Return R&D tax credits.
Return so a semblance of the glass & steagall act.
Up the amount of coverage the FDIC is authorized to cover even before regulators need to take over.
Allow an upfront loan privately for banks to lend against temporarily with stock put as collateral.
Up the corporate tax rate.
Remove the cap on SALT taxes for those under 400k.
Change marginal tax rates for individuals.
There insane amount of things congress can do if they just… do it.
Why would you want a fiscal policy to crack inflation? Better to crack it with monetary policy and use fiscal policy to mitigate adverse distributional effects of the monetary policy, since its easier not to overshoot badly that way than with contractionary fiscal policy.
Also, while monetary policy can be adjusted more frequently, those adjustments take a while to move through the economy, so maybe you want to be careful with it or you will crush a few too many banks.
Yes, you can stop inflation while also mitigating the adverse distributional effects (adverse short-term aggregate effects, no, but that’s not what I said to mitigate.)
> You stop inflation by making people poorer.
You stop inflation by making people poorer in aggregate. Ideally you want to do that by compressing available resources, rather than doing so in equal proportions across the spectrum of means, and either of those is better than disproportionately making those already poor poorer.
Monetary policy is good for addressing the aggregate target, but its not a very good tool for tuning distributional impacts; fiscal policy is much capable of steering distribution of impacts.
If you want to combat inflation, you need to reduce demand, which really means removing "hot" dollars from the economy, not "cold" dollars.
So no, you likely can't mitigate the adverse "distributional" effects the way you want, while also effectively fighting inflation. Everyone needs to get poorer.
No, I’m not.
> A dollar held by a startup or a poor person is much more inflationary than a dollar held by a big company or rich person
Rich people have to lose more money in aggregate for the same inflation effect as poorer people losing the same amount of money, sure.
But that's fine, because its a lot less bad for rich people to lose a lot of money than people whose ability to meet basic needs is marginal to lose a little money, so, yes, my statement that the distributional goal should be compression when the broad goals is anti-inflationary was exactly what I intended, even including consideration of velocity of money in the domestic economy.
The top 1% own about 25% of assets in the US, and of that the vast majority are likely illiquid and non-cash. If you assume that the top 1% hypothetically hold 10% of the cash, then draining their cash accounts to 0 and burning it would be equivalent (not counting money velocity) to everyone else taking a 10% haircut. If you attempt to account for the velocity of money, that would likely only be a small single-digit percentage. The CPI is higher than that, and many lower- and middle-class families are seeing a much bigger loss in purchasing power thanks to increases in the prices of food, fuel, and housing.
Moreover, the last 2 years have been an experiment in exactly what you are proposing - using monetary policy to control inflation while using fiscal policy to attempt to prevent it from hitting most people. It has not worked, and it will not work in the future. In fact, the policy has had the opposite effect that you probably want: real wealth is increasingly concentrated in the hands of the wealthy, and inflation is largely concentrated in products purchased by the poor.
> Change marginal tax rates for individuals.
Politician? Why are you trying to hide your intent here. Raise taxes across the board, just say it.
You can spend in a dis-inflationary manner: increasing production capacity, facilitating resource extraction, and generally anything that helps on the supply side of things.
But absolutely, given the current Administration and the Democrat agenda, this is anathema. If anything they would rather spend to destroy supply as much as possible, since this is generally what the SDG, DIE, and Green agendas consider "success".
A great example is the Inflation Reduction Act. The "green" portions were estimated to cost $390 BB initially, but are now estimated to cost $1045 BB (yes, over a trillion dollars), and this number will almost certain go up[1].
Not a penny of it goes to anything that would increase supply of what you'll need for the "green" infrastructure, it's all pure demand, the bulk of it EV incentives. You would have trouble coming up with a more inflationary plan if you tried.
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[1] https://budgetmodel.wharton.upenn.edu/estimates/2023/4/27/up...
If necessary put in a temporary price and wage freeze. This was done under Nixon.
When the government suspended student loan payments (and started paying extra time for staying home, and other pandemic benefits), it indirectly put cash in the hands of people who were used to living month-to-month. No doubt some were fiscally responsible and put the money in stocks, which made the stock market have a crazy big rally, but that's a different story. Most just went out and bought things they might not have bought otherwise, or which they had been waiting/saving for. But the supply of things didn't increase--in fact if anything the supply went down because of part shortages. What happens when demand goes up and supply goes down? Prices skyrocket. And this is measured as increased consumer prices (aka inflation).
Now the supply shortage has been mostly worked out, but prices remain high. They are sticky--that's the actual, technical term. A demand shock is required to unstick prices, a core part of getting inflation under control. Suddenly reducing the available monthly budget of those same people who were driving inflation in the first place would do that. So resume student loan payments.
There's no way it'll happen before the next presidential election, however.
If that was the case, then Zimbabwe made a massive mistake when switched to the US dollar after having had to print 1, 10 and 100 trillion dollar notes because inflation was pushing 230,000,000 percent.
But I find this line of thinking dubious. It costs more than $1700/month for 10 years just to pay for med school? ($160k total cost at 5% interest — and both of those values are at the low end.) That’s an incredibly stupid situation for our economy to be in. That is a massive barrier to entry for a some very important careers.
And on top of that, we’re saying that these massive payments are crucial to getting inflation in check?
Maybe you’re right that this “helps” superficially reduce inflation. But the root problem is much deeper, which is that our economic system cannot handle people making a decent money.
The root cause is likely a lot closer to big companies jacking prices of basic goods and services, blaming inflation, and making record profits in the meantime.
Companies are still catching up with supply. Lots of chemicals and other base materials are still in short supply. A lot of this stems from China still having shutdowns and taking a long time to recover.
Companies also don't want to spend tons of money expanding production when they don't believe the increased demand will continue forever and especially while interest rates are increasing. After supplies catch up, and student loans resume, they likely expect demand to return to pre-pandemic levels.
I think there are factors there that is going to cause permanent reductions of production capacity in many economies, though:
1) Demography: Boomers have started retiring in large numbers, and a lot more retire in the next 5-10 years. There are not enough young people to fill all of the openings they leave behind. Also, work participation rate among young people is falling for various reasons. Unlike their parents, the boomers have a lot of saved up wealth and less of the frugality of those who remembered the 30s, meaning many will continue to have high levels of consumption into their retirement.
2) Reversion of globalism: Covid made many realize that global supply chains are fragile during emergencies, and many countries are re-shoring essential and strategic production, such as medical supplies, chips/electronics and agricultural products. The cost of this improved resilience is lower efficiency.
3) Increased world tension: With the invasion of Ukraine and the possibility of war between the US and China over Taiwan, world spending on armaments is going up, taking production capacity away from consumer goods. The same tension is already causing reduced trade.
4) Populism/socialism/environmentalism: There appears to be a surge in populist, socialist radical environmentalist sentiments in many places, with demands to "tax the rich" and other actions that will make investments less attractive.
In sum, I think these factors will have noticable effects on the supply side in many years to come, causing inflation and/or interest rates to stay elevated for 10 years or more.
Unless there is a sudden surge in automation, of course.
The value of money is defined by what you can buy for it. If there isn't enough stuff to buy, either prices go up or there will be shortages of those products. If I have to chose between paying 20% more for the bread or to find the shelves empty half the time, I prefer to pay 20% more.
In "other economic systems", meaning socialism, empty shelves are pretty common.
But... inflation already has gone down. Oh, yeah, everyone cites the headline 12-month trailing inflation, but if you look at the monthly data, the high inflation period was sometime in 2021 (where depends on if you look at CPI, as is most often cited, or PCE, which the Fed uses) through the first half of 2022.
The June print for healine annual inflation (from the prior 12 months) is going to be ~3%. Negotiate your wage increases before it is too late.
Only due to shifts in food and energy prices, which are both highly volatile. Exclude those, and there is still 0.3% month-on-month inflation, or 3.6 annualized, which is still almost 2x the target.
It would be absent in the first release in which the high inflation period was 12+ months in the past. That would be the release covering June 2023; the most recent release. covers March 2023.
Kind of weird that you’d answer “in which month would the high inflation ending in Jun 2022 be just part of the baseline prices and not a factor in the 12-month trailing increase?” with some answee that is March 2023 or earlier, and not June 2023.
Second, looking at the monthly seasonally adjusted numbers also accounts for seasonal variance.
https://taxfoundation.org/publications/latest-federal-income...
Mostly because it expensive to get around taxes, something the 1% of the 1% can easily afford.
Privately, I know how to make investment income go to zero if you have enough of it. It’s all rather fascinating. Really, the top 5% of the top 1% could do it. But if you have less than $1m income (or cap gains), then it’s likely not worth it.
https://www.youtube.com/watch?v=QPKKQnijnsM
The top 1% had almost 40% of the wealth in the US, in 2012.
And that video is from 2012, from before Covid, now it's much, much worse, because since 2020 the top 1% have captured about 66% of the extra wealth created.
Sounds ideal to me.
HN is higher income bracket so they don't need the services the government provides- and have the arrogance to call it waste.
Rich people pay more property taxes.
Rich people pay own companies, which pay corporate taxes.
LA just enacted a wealth tax on 5m+ real estate.
My point is how many times have we been sold the concept of "if we just bond or tax X, we can solve problem Y". These always turn out to be Big dreams where billions get spent and nothing really gets better.
Look at the CA high speed rail diaster.
Look at this one... The government sold a bond for homeless housing and raided the money for another project. https://calmatters.org/california-divide/2021/03/california-...
We don't have revenue problems, we have spending problems.
Death tax
Top level income tax rates
Property taxes
Sales taxes
And for the self employed - estimated quarterly taxes
In order to use taxes to counter inflation (when it is defined as increas in consumer prices), you need to tax those who would otherwise spend most of the money. The most efficient way is to tax the upper middle class.
Edit: Forgot to mention the obvious, if this is how you feel, why isn't a higher sales tax on certain items ideal? People scoff at sales tax proposals because they'd target the poor, but sales taxes could be implemented progressively too. Tax new cars, smartphones, etc. More expensive items get a higher tax, reducing the impact on poorer people.
Inflation happes when there's an imbalance between supply and demand. MMT argues for increasing deficit spending to fund all sorts of social programs. It also argues that the purpose of taxes is not to "balance the budget", but rather to tamper the inflation that tends to follow overspending.
The alternative (increasing interest rates) doesn't work properly under MMT, since treasury bonds cannot have a real interest rate, or the deficit spending would eventually break down. That means that under MMT, purchasing power of consumers must be pulled back using taxation of various sorts, which only works if you tax the consumers.
The problem with MMT (the way I see it) is that adjusting taxes to regulate inflation is probably an even more painful approach for most people than using the interest rate.
Anyway, the fact you need to tax the actual consumers to fund social programs remains the same, even in more traditional social democratic/keynsian approaches, even if they use the interest rate to regulate inflation.
If you look at northern Europe (where I live), taxes on the middle class are much higher than in the US. They're also higher for the poor, but with the increased social benefits, free healthcare, etc, it matters less for them.
Oh, btw, a lot of the taxes collected ARE, as you propose, collected as sales or luxery taxes, as well as employers taxes (hidden income taxes) Where I live, the direct income tax is "only" around 45%. However, the base sales tax is 25%. The employers tax (tax on employers for paying salaries, in other words a hidden income tax) is 25% (if you make more than $100k). For some items, such as cars, fuel, alcohol, tobacco, cosmetics, sugar/candy, etc, there are additional taxes, often well over 100% of the base cost.
All-in-all, I suppose, out of the salaray budget that my employer allocates to me, 75-80% ends up as taxes, somehow.
And I'm middle class, not rich and not poor. If the left in the US really wants to have a European style welfare state, this is about the level that allows for that.
If given the facts about this, I doubt many American's would want to switch. On the other hand, few people over here would want to switch in the other direction, too, since they're used to the taxes and the benefits they buy.
Fairly similar to how at present they have done exactly the same thing and generally try to call it Keynesianism from what I can tell. They skipped the parts of Keynesianism that would involve spending less which I suspect is a contributor to the progression of 2000-2007-2023 where every 10 years the crisis gets bigger.
The situation is not that complex. We need people to, by and large, create at least as much value as they consume. There are enormous efforts to find an alternative to that basic balance by creating lots of money and they by and large aren't actually working.
Also the rich don't consume that much stuff in absolute terms, so taking stuff away from them can't help other people to an great extent. The taxing has to be on the middle class who do most of the consuming. There are no alternatives. Can't tax the poor because they have no money, and ironically can't tax "the rich" because although they nominally have money they don't own that much real stuff as a group.
Here is Elon Musks 1 billion dollars in taxes. With his 1 billion dollars we can fund a wide ranging web of wasteful bureaucrats, or we can let Elon use his 1 billion to fund a capital project that generates jobs, technological advances, and builds a product that can be exported worldwide so that there is a positive impact on GDP. I prefer 1 billion of Elon capital projects over 1 billion of government programmes Every. Day. Of. The. Year.
Raising taxes on high-income people could help if it goes far enough that we actually reduce our consumption. High income people have low marginal propensity to consume - that’s why it’s better to give regular people money when you want stimulus. Tax hikes targeted at the very high income would have to be very steep, or they’d just be absorbed by lower savings rates.
As long as we’re entertaining weird taxes, progressive consumption tax is probably what you want here. Special sales taxes on big ticket luxury items (cars, boats, watches, etc) could do the same thing a little less elegantly but in a more familiar wish.
Most wealthy individuals would take a haircut if corporate holdings were worth less. It mostly has the same effect.
It's not like Bill Gates has all of his wealth in cash.
Yes and no. The Fed has a not-so-subtle goal of taming inflation in part by capping asset prices with its interest rate hikes.
Correction, inflation is either from excess demand or constrained supply - the reasons for inflation matter when trying to address the problem.
Inflation is always about the balance between supply and demand
> the reasons for inflation matter when trying to address the problem
Less than one might think based on the either or thinking. Even when a change in supply causes inflation, reducing the demand side will bring it back down.
The exception being for specific items where demand is not very elastic in the short term, such as fuel or basic food items.
But even increasing interest rates (a demand side intervention) may not affect those prices by much, it will affect other prices enough that aggregate demand can stay low.
And like most economic theories it’s very hard to (in)validate in the real world.
- The nominal quantity of money ("print trillions of dollars")
- Aggregate demand ("buy everything in the world")
- The velocity of money ("give each resident a million dollars a month")
Increases in the quantity * velocity of money drive inflation in the long run: prices do not equilibrate immediately but have to be dragged up (or not, as the case may be) by supply and demand.
If many people believe printing trillions of dollars doesn’t matter, then I’d like to hear why. I’d like to not have taxes…
It also needs money to do weird, dark magic with bank balance sheets so that businesses can continue to acquire the capital to maintain and grow the supply of goods and services. It’s less clear what extra money sloshing around the financial system does. In the post-2008 era, people were freaking out about it not doing enough.
I think people think printing money causes inflation, and in general “know” that you shouldn’t “spend more than you make”… but I think things are different when you can print money.
It would actually be a very efficient means of fund raising (vs the current tax code), as well as fighting income inequality (the basic income), and even if it did cause inflation, that’s basically just a very efficient progressive wealth tax (when coupled with a universal basic income).
Imagine if the Fed just printed up 10 million dollars for everyone tomorrow. Do you think everyone would then be wealthy?
A side effect of that position is decreased sensitivity (aka inflation) of that currency to money printing.
Because you're effectively amortizing each new dollar's dilution of value against {everything the US uses dollars for} + {everything the world uses dollars for}. Which is a much larger denominator than national-only currencies.
(And side note that being a trade currency is somewhat of a Faustian bargain, because it carries an expectation/obligation that you will create sufficient amounts of your currency to facilitate international trade)
If the US keeps using the dollar as a fast pass to imposing unilateral sanctions internationally, and de-dollarization expands, there will be a very different level of correlation between monetary policy and dollar inflation.
And personally I think the last 15 years have done a pretty good job as a counterpoint to that school. The whole QE regime was chugging along without generating a large amount of inflation and then we had both the supply and demand numbers go bonkers. Then inflation.
I think this period will be studied for years (though because it’s economics I doubt there will be much decided).
In terms of policy making, the independent central banks of many countries (e.g. BoE) have been mandated to follow this model pretty closely - when inflation (a primary metric against which they are judged) rises (like now), interest rate increases and 'QT' are the response.
I'd prefer to see fiscal policy being used more - then the expansion/contraction of the money supply can be better directed for social good, and interest rates can remain nearer their 'natural' level in terms of correct pricing of time/risk.
Of course with a growing economy this makes no sense, as you need more money to facilitate this growing exchange of goods and services, and so the gold standard is inherently deflationary (see also Bitcoin).
(Fiat) Money of course is just a signalling mechanism, it is not 'real' - money supply / velocity / inflation are concepts for understanding the mechanism, not much politics or philosophy involved.
True that the rich will tend to save money thrown at them, but they also tend to sink it into assets (like property) hence the 'everything bubble'. As you point out, wealth taxes won't move the needle on the price of bread, but may help reduce the costs of housing.
At the whole economy level, I'd suggest that supply and demand don't really cause inflation - at least, not the kind of disfunctional inflation that we should guard agains. For example, if the supply of bread is reduced, then necessarily people will eat less bread (and price signalling will ensure that it is the poor that eat less bread). So long as this does not trigger e.g. a wage price spiral or other pathological effect, then this is 'fine'.
How do you define rich?
Trying to define buckets with arbitrary thresholds is futile.
It greatly benefits the top outliers, since the top bucket will have a huge disparity between its strictly defined lower bounds, and an infinite upper bound.
There's no need to "define rich". A formula without defined bounds (this is the most important part) should determine how much tax you pay, and it shouldn't discriminate between different forms of income. More importantly, all net worth gains should be taxed equally.
What policy would you use for measuring someone's net worth? How would you ensure they're being honest?
Wealth taxes are a not the best idea. Being taxed on something illiquid that can’t generate cash flow is the pinnacle of dumb taxation. For example, you have a piece of art. You’d have to sell something just to hold onto the art, and if you don’t have anything to sell, you’d have to sell the art itself just to pay for ownership of the art. It would make some sense to increase capital gains taxes instead of slapping people with a wealth tax. I say this as someone that would not be hit by a wealth tax.
Also, the rich can simply move assets out of the country, and then you erode the very thing you want to tax.
It’s pretty easy, hit dividends, income for social security and Medicare purposes without caps, etc. Eliminate deductions for margin interest, tax filing, legal, orgs fees. Put an excise tax on LLC formation and annual reporting, and require an annual filing of beneficial owners of corporate entities. Charge a higher fee for foreign and corporate owners.
Basically take all the loopholes that the .01% use and close or disadvantage them so they don't use them (or as much).
Rich still get richer but the system stabilizes.
My house isn't very liquid, can't generate revenue very effectively, and I'm taxed every year on its current value. Guess us regular folks are already subject to a wealth tax.
If you want to say it's difficult to tax illiquid assets, that's fine. But it's not impossible and while it would just change people's relationships to these types of assets (maybe in a good way for society), it's not going to be the end of the world.
And yes, all the reasons why "taxing X would actually be harmful for the economy" somehow magically do not apply to the small fish.
Tax art and the value of art decreases thus decreasing the tax. Which is likely good for the economy.
It was far more than $1400 checks. Student loans are STILL paused for goodness sakes. The enhanced unemployment checks were larger than regular checks for some people - even my wife who makes Ok money broke even without having to work for several months. $3000 per child given to families. For a couple years there was 2.5% 30yr mortgage financing and refinancing for everyone. That's just off the top if my head. It wasn't all for corporations, an insane amount of cash was thrown at regular people.
The rich are not driving inflation from consumption, the middle class is. The top 1% has 40% of the wealth, but they aren't buying 40% of groceries, gas, and consumer goods.
Money sitting in a bank accounts doesn't drive inflation, consumers spending money does.
I can assure you, the wealthy are not keeping their net worth under a mattress. They are purchasing and paying for assets like property and businesses.
Not that they can't have cash they are waiting to deploy (AAPL, MSFT, & GOOG sure do) but they are wealthy because they own assets and use that to purchase other assets.
The 1% are not walking into the supermarket and buying up all the butter and driving up prices
More demand, but the same supply of resources means prices go up. Take a look at the feds balance sheet in 2008 and compare with now (https://fred.stlouisfed.org/series/WALCL)
It's no surprise we've had a bull run for over ten years.
If you print the money and put it in the incinerator, you have no inflation. If you put it in a mattress, no inflation. If you print money and put it in APPL stock, no inflation. However, When you pay nurses, construction workers, software devs, and other workers, then you get consumer goods inflation. The problem with printing money is the trickle down effect.
Like you said, it is supply and demand. AAPL corp or Jeff Bezos are not walking into a grocery store and buying all the butter. Prices go up when your worker is willing to pay more for butter.
For some reason, many people think that if only we taxed the rich and gave it to workers to spend, then the price of butter would go down in the market. This is insane.
When you buy XYZ stock the company is able to borrow more and at better rates. They are able to attract buyouts, pay higher salaries, hire more employees and generally spend more in a number of ways.
When individuals like Jeff Bezos add another zero to their net worth they are able to borrow against their own stock holdings as well as are more likely to splurge on other things (like his new yacht) such as funding Blue Origin and Project Kuiper so Musk doesn't pass him as the richest man in the world.
All this results in more money spent and entering the economy ultimately trickling down to purchases of milk, bread and starter homes while making many other stops along the way.
If I understand you correctly, I think where we disagree is the effect of Taxation. If the government tax the wealthy and incinerated it, then yes, I agree that would reduce job growth, wage competition, and inflation. However, if taxes are increased and the money is distributed directly to the workers, I would expect this to increase inflation.
Do you think job creation from capital reinvestment is a stronger driver of inflation then putting that money in consumer pockets?
The only ways to reduce inflation is to increase product Supply or reduce demand. I don't think that taxing the wealthy will increase Supply and I do think that giving workers more monetary transfers or a lower tax burden increases demand.
You simply can't reduce inflation and while increasing consumer purchasing power while holding supply constant.
> if taxes are increased and the money is distributed directly to the workers
This is unlikely, taxes and laws are always overseen by lobbyists who are funded by the wealthy. I can't imagine a situation where they would vote themselves into a worse situation.
If they ever appear to, know the harm they face would be to their advantage (such as crushing startup competition or preventing litigation).
Perhaps this seems like an overly jaded take, but please reference this Princeton study that found the wishes of the US population have had no real effect on laws for decades.
https://scholar.princeton.edu/sites/default/files/mgilens/fi...
TL;DR: https://imgur.com/a/tvqQXFc
Furthermore, I don't think that is the underlying assumption held by people who say we should tax the rich to fight inflation.
It worked great, every tax payer got a few thousand and an indirect +$40,000 tax bill (the government has to get money from tax payers for it) they will be paying out PLUS inflation and other side-effects for years to come.
Props to the rich for figuring out how to bait the people.
for starters adopt a Canadian style banking model. The country largely runs on 5 very tightly regulated banks that haven't gone bankrupt in a hundred years. These regional banks fall over in every little crisis and they always end up being bailed out anyway (see SV bank), so you might as well consolidate the sector for good.
I think a bigger diff is that Canada doesn't do 15/20/25 year fixed rates. Usually at most 5 years fixed and then you renegotiate and see what you can do. And a lot of variable rates.
Perform better is objective since you provided no metric for anybody to compare, same with resiliency.
Auditing can be done electronically, even via AI now.
It sounds like you’re saying since they have more monetary resources they are more stable, which is true for large companies. Banks don’t own their assets though, a customer can come at any time and remove money. In fact this was rumored to happen in Canada last year, where your 5 major banks went offline after Trudeau opened his mouth about the Freedom Convoy.
The aversion to recession comes from people disliking the idea of losing their job, house, way of life, hell maybe even their family. This is like saying some people need to suffer and lose everything for the greater good.
The feds are stuck trying to tame inflation, and the skyrocketing interest rates are crumbling regional banks. Big banks are a lot more hesitant to lend to small businesses, and many otherwise viable businesses will fail if credit freezes.
Big banks are getting even bigger as depositors flee, and concentrating risk (even more) imo.
I guess the higher interest rates are doing their job in slowing the economy down, but it's wild that we're stuck with whatever the feds do with their blunt toolset because congress is seemingly dysfunctional.