In her latest article, PBI Chair Ellen Brown argues that the Fed’s rate hikes, too, will only make inflation worse. While the Fed applies its go-to tool of increasing interest rates to suppress demand, the real problem continues unabated — supply shortages caused by brutal lockdowns, sanctions, war, and a farming crisis driven by overly stringent regulations.
Interest Rate Hikes Will Not Save Us From Inflation
“Higher interest rates don’t alleviate cost/push inflation caused by supply crises; they make it worse. Rather than making money harder to get, the government needs to focus on the supply side of the equation, stimulating local production to bring supply levels up. Rather than Volcker’s solution, what we need is that pioneered by Alexander Hamilton, Abraham Lincoln, and Franklin D. Roosevelt, who pulled us out of similar crises with public banking institutions designed to stimulate infrastructure and development. …
“We need to stimulate local development with a national infrastructure and development bank like China’s; and for that, Congress needs to pass an infrastructure bank bill.
“Four such bills are currently before Congress. Only one, however, is capable of generating the nearly $6 trillion that the American Society of Civil Engineers says is needed over the next decade for U.S. infrastructure investment. This is HR 3339: The National Infrastructure Bank Act of 2021, which would effectively be self-funded on the American System model – a critical feature given that the federal debt is at record levels.”
Photo by Olle Svensson.