Trick Down ECONOMICS

"...what we’ve learned is that unemployment can be even lower than we thought and not result in troubling levels of inflation...we had 3.5% unemployment, which was sort of the lowest period of sustained unemployment in 50 years. And we didn't see inflation result...with globalization, things can be made anywhere, and that means it's difficult to raise wages or prices. So if you raise wage costs or prices, someone will find a cheaper place in the world to make a product or increasingly to deliver a service. And all of that is enabled by advancing technology..." --- Federal Reserve Chairman Jerome Powell interview with NPR September 4, 2020 https://www.npr.org/2020/09/04/909590044/transcript-nprs-full-interview-with-fed-chairman-jerome-powell

This, and much of the rest of the interview, is an explanation that the Federal Reserve’s mandate will not see it accomplishing what some might think it can and should. Yet we continue a laser focus on the Fed, wait for it to wave its magic wand, lower rates, buy bonds and maybe even stocks. For a generation all its magic has done is increase inequality and take focus away from what really needs to be done for the vast majority of the people in this country who have little capital but plenty of energy and desire to work to prosper too.

Although Chairman Powell has much in the way of explanation of what the Fed does, how interest rates work and how he thinks inequality rose so sharply, we have been watching the Fed’s magic act for a long time now. Fixating at the end of the last century on whether Allan Greenspan's bulging briefcase portended another rate cut. Imagining Ben Bernanke wincing a bit when big business took its bailout billions and did a much more efficient job of buying back stock, searching out overseas tax loopholes, restoring and then boosting eye-opening top level executive pay, and keeping average man wages stagnant than investing in manufacturing in this country or creating good-paying jobs with reasonable benefits.

Powell tells us that wages have been stagnant for a long time and he tells us some of the reasons why, matter of factly, all during an era when job insecurity, retirement security, food insecurity, and security insecurity have soared in sync with the major stock exchanges. The Fed takes out its tool chest to support business, through less manic times and the ever more recurring crises, and I’m sure hopes that this time will be different. Sharp-eyed financiers understandably accept cheap money and, trust me on this, their number one priority is not boosting employee compensation but rather sending down as little trickle as possible. The Fed is de facto a cheerleader for the fantastical trickle-down when it should be a pallbearer.

Of course there’s no inflation, and there isn't going to be any, ever, not in the lesser struggling economy the Fed measures. The inflation is over in the other economy, the one with the 30 million dollar condominiums and 20 million dollar yachts, the one with the capital that will benefit from the low rates and scream socialist at anyone who questions where all that cheap money came from and what they should do with it.