Inflation: The Fed's Crash Landing with L. Randall Wray
Macro N Cheese
English - May 21, 2022 12:00 - 59 minutes - 86 MB - ★★★★★ - 120 ratingsNews Government activism economics fjg greennewdeal mmt politics progressive revolution Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
Real Progressives and Macro N Cheese are committed to bringing MMT to activists and folks with no background in economics. Many of us were only interested in learning how MMT disrupts the concept of taxes funding federal programs, but the more we know, the more we want to understand. MMT is funny that way.
If you’re new to MMT, this week’s interview with L. Randall Wray might appear to be wonky and intimidating. But we urge you to listen and promise it will be worth it. We’ve had a few episodes dealing with inflation in recent weeks because that’s where we are at this particular time in history. We believe it can’t be talked about often enough because we’re surrounded by misinformation in the mainstream media and lies from the mouths of so-called experts.
Steve invited Randy to talk about the recent paper he co-authored with Yeva Nersisyan, another friend of this podcast. The title speaks volumes: Is It Time for Rate Hikes? The Fed Cannot Engineer a Soft Landing but Risks Stagflation by Trying. To put it bluntly, confronting inflation by raising interest rates is dangerous. Randy describes the catastrophic chain reaction – causing bankruptcies at home and tanking the economies of developing nations. He explains in detail how this happens, both to individuals and nations.
The ‘experts’ love to blame government spending for today’s inflation – especially the paltry stimulus checks disbursed during the pandemic. Wages are another favorite culprit. Listeners to this podcast know these are not the causes. (How long ago were those damn checks?) However, both the pandemic and the current war have brought us supply chain disruptions. We can also look to corporate manipulation of prices and markups:
Randy defines stagflation and its causes. He compares today’s inflation to that of the 1970s along with the actions of the infamous Paul Volcker. He explains why the Fed’s “tools” for fighting inflation are no tools at all. He suggests a legitimate role for a central bank includes protecting the public from banking fraud. He replies to Steve’s question about eliminating the interest rate altogether:
Steve talks of people’s desperation as they look for solutions to the real-life problems that are not on the Fed’s radar. Inflation could be addressed with targeted spending on behalf of the public using the fiscal power of Congress. Expecting the Federal Reserve to fix it with interest rate adjustments is like giving a child a fake steering wheel in the back seat and expecting them to drive the car.
L. Randall Wray is a Professor of Economics at Bard College and Senior Scholar at the Levy Economics Institute.
www.levyinstitute.org/scholars/l-randall-wray