The Fed Is Crushing Investment Right When We Need It

Source: The American Prospect
by David Dayen

“The U.S. economy has a short-term problem and a more enduring long-term problem. The first is high inflation and hence decreasing real wages, which makes it hard to sustain growth in an economy mostly dependent on consumer spending. Second, over the past 50 years we have seen a troubling drop in investment (whether for infrastructure or industrial activity or basic necessities) that has inflated the cost of things like housing and health care while leaving the nation vulnerable to supply crunches caused by the pandemic and Russia’s war on Ukraine. The decided-upon cure for the short-term problem — rising interest rates from the Federal Reserve — is degrading the long-term problem. What’s more, it’s unlikely to make more than a small dent in rising prices.” (06/22/22)