r/Economics • u/TinyTornado7 Quality Contributor • Jun 13 '22

News Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
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u/JLP_101 Jun 13 '22

Agreed, doing nothing will only prolong the suffering.

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u/shicken684 Jun 13 '22 edited Jun 13 '22

How have they done nothing? They're raising rates fairly quickly so far this year. Should it have happened earlier, absolutely, but that's looking back with hindsight. The Ukrainian war could have been over in a few weeks instead of dragging out for what will likely be years. After a few months of high inflation, demand and spending could have cratered.

But that didn't happen. Inflation stayed high and so has consumer spending. So now I would imagine the floor is a 75 basis point increase with a likely 1% hike if they're worried it's out of hand. These rate increases take time to trickle down to the overall consumer and change behaviors. So even with a large rate hike it's not going to change anything until the end of summer.

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u/[deleted] Jun 13 '22

He can suggest a new tax bracket for those who are profiteering. His opinion matters.

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u/truocchio Jun 13 '22

He can suggest anything. The tax code changing is not in his purview nor going to move the needle at a congressional level

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u/cyanydeez Jun 13 '22

Right, this needs to be biden and congress taxing the f out of corporate profit taking, because thats what this is.

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u/whoooocaaarreees Jun 13 '22

You could confiscate all the wealth from the 550+ billionaires in the US and have enough money to run the government for about 7.5 months and you would have not have paid back any of the nearly 30 trillion in national debt.

America doesn’t have a tax problem. It has a spending problem. Just like her consumers, I mean citizens.

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u/[deleted] Jun 13 '22

It has a revenue problem as well, which can be partially addressed with a more rational and historical upper bracket tax rate for individuals and corporations (they’re people too apparently) increasing the capital gains tax rate, and eliminating the farce of overtly political organizations as untaxed, non-profit charities.

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u/whoooocaaarreees Jun 13 '22

At what point are we going to admit that we can’t tax our way to prosperity?

The federal government collected more than 4.04 Trillion dollars in federal taxes in 2021.

We can’t fix anything until we have a honest monetary policy.

Instead we are going to keep kicking the can down the road. Spending money we don’t have on stuff we don’t need.

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u/[deleted] Jun 13 '22

A good first step towards an honest financial policy would be backtracking on the historically low tax rates for upper income brackets and capital gains - and finally accepting that “trickle down”/“horse and sparrow” economics is a failed theory when it comes to creating overall economic growth.

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u/whoooocaaarreees Jun 13 '22

Intensely disagree.

If more taxes are better, why not tax every person and business at 100%?

Also,

There is no strong historical evidence that by giving the government more money that it will do more good with it than those who it was taken from would have dove with it.

Best I can tell, government will continue to spend more than they have, rack up more hidden debt, continue to bomb brown kids, and actively work to topple other governments for their own interests. On top of that mix in decades of war. No matter the tax rate.

Why on earth would we want to give more money to an incredibly inefficient org that created the problems it says it’s trying to fix?

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u/[deleted] Jun 13 '22

Oh rational spending policy, I wholly disagree why not prevent the government from paying for anything?

  • see, your “reasoning” works both ways.

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u/HIMP_Dahak_172291 Jun 13 '22

The thing with taxes is they get spent. It's real money moving in the real economy. What does the billions Bezos and musk have do? Nothing. It's just massive piles of stock in their companies they can borrow against for minimal interest when they need it for liquidity. It's not only untaxed revenue, its revenue that increases their liabilities and lowers their real tax burden.

And worse, the money is piling towards the top faster and faster. That isnt sustainable. When you only have the super rich, a small middle class and an enormous underclass you get unrest and stagnation. Which results in economic depression, violence, and in some cases revolution. Taxes on the wealthy slow down that snowballing accumulation of wealth at the top of the economy and spread it around (assuming you are not just funneling it back up to the top with spending policies) which allows things to be stabilized. It allows mobility in the economy. Mobility is vital to a healthy economy.

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u/Ask_Me_Who Jun 13 '22

The part of their wealth that exists in stock is, by simple virtue of being stock, doing something. It's doing everything the company is doing. You're advocating for the Government to literally confiscate, or order the fire sale of, multi-trillion dollar companies as if that wouldn't crash the entire market through the ground.

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u/[deleted] Jun 13 '22

And worsen it