October, 18 2022, 11:40am EDT
![Groundwork Collaborative](https://assets.rbl.ms/51866270/origin.jpg)
Experts Agree: Fed Should Think Twice Before Raising Interest Rates Again
Ahead of next week's Federal Open Market Committee meeting, a growing chorus of experts is raising questions about the Federal Reserve's sledgehammer approach to reining in inflation. Here's what they are saying:
Adam Tooze | European Institute at Columbia University:
WASHINGTON
Ahead of next week's Federal Open Market Committee meeting, a growing chorus of experts is raising questions about the Federal Reserve's sledgehammer approach to reining in inflation. Here's what they are saying:
Adam Tooze | European Institute at Columbia University:
"Raising interest rates is not going to bring more gas or microchips to market, but rather the contrary. Reducing investment will limit future capacity and thus future supply...If the generation of young people whose educations were blighted by Covid lockdowns finish their training only to find labor markets closed by a global downturn, it will be an inexcusable failure of policy." [10/4/22]
Ayhan Kose | World Bank:
"As central banks across the world simultaneously hike interest rates in response to inflation, the world may be edging toward a global recession in 2023 and a string of financial crises in emerging markets and developing economies that would do them lasting harm." [9/15/22]
Barry Sternlicht | Starwood Capital Group:
"If the Fed keeps this up they are going to have a serious recession and people will lose their jobs" [9/15/22]
Brian Sack | D.E. Shaw, former Federal Reserve Bank of New York official:
"Moving in these 75-basis-point steps was effective when the Fed had a long way to go. It becomes more problematic when they need to calibrate policy more carefully, and I believe we're approaching that point." [10/8/22]
Cathie Wood | Ark Invest:
"Without question, food and energy prices are important, but we do not believe that the Fed should be fighting and exacerbating the global pain associated with a supply shock to agriculture and energy commodities caused by Russia's invasion of Ukraine."
"The Fed seems focused on two variables that, in our view, are lagging indicators--downstream inflation and employment--both of which have been sending conflicting signals and should be calling into question the Fed's unanimous call for higher interest rates." [10/10/22]
David Kelly | J.P. Morgan Asset Management:
"In the long history of Federal Reserve mistakes, one general error stands out. They tend to wait too long and then do too much... They appear to be well on their way to repeating this error today." [10/12/22]
"The Fed is in grave danger of tipping this economy into a recession by being more hawkish than they need to be right now." [9/12/22]
Greg Mankiw | Harvard University, former George W. Bush Administration official:
"...it's easy for a novice to overreact, and then if you turn too much in the other direction, it can be a source of instability rather than stability." [10/11/22]
Jeremy Siegel | Wharton School of Business:
"(Powell) is going to crush the wages, which have fallen behind inflation...you can't blame wages for inflation when they are two, three, five points behind inflation...I think the Fed is just way too tight." [9/24/22]
Joseph Stiglitz | Nobel Prize-winning economist:
"Will raising interest rates lead to more oil, lower prices of oil, more food, lower prices of food? Answer is clearly not. In fact, the real risk is it will make it worse... Why? Because what we need to do is to make investments to relieve some of these supply-side bottlenecks that are causing such havoc on our economy. It's going to make it more difficult." and "...raising interest rates in non-competitive markets may lead to even more inflation..." [9/2/22]
Katie Nixon | Northern Trust Wealth Management:
"So I'm not as nervous about a deep recession, but I do think that this latest dot plot and the summary of economic projections points to a Fed going a lot further than, perhaps, they need to go, given the inflation outlook, and that they are doing so at a time when the economy is quite vulnerable to a slowdown. It's not just the US economy, it's the global economy and this might be a bridge too far." [9/12/22]
Kurt Rankin | PNC:
"Unfortunately, wage growth in the U.S. economy has already begun to fizzle while inflation has remained stubbornly high. The Fed's 'demand destruction aims will only serve to weaken workers' bargaining positions in the labor market as consumer demand is undercut and businesses see less need to hire in response to slowing demand for their goods and services." [10/14/22]
Liz Shuler | AFL-CIO:
"There are some bad ideas floating around out there (to bring down inflation) like the idea that working people, who have kept the country running are to blame for inflation."
"Nothing could be further from the truth." [9/21/22]
Michael Darda | MKM Partners:
"I think households here are also caught in the Fed's crosshairs because the tightening is likely to keep going until it kills the labor market...They [the Fed] will kill inflation, but they are going to end up killing the labor market." [10/14/22]
Pierre-Olivier Gourinchas | International Monetary Fund:
"Monetary policy could miscalculate the right stance to reduce inflation. Policy paths in the largest economies could continue to diverge, leading to further US dollar appreciation and cross-border tensions. More energy and food price shocks might cause inflation to persist for longer. Global tightening in financing conditions could trigger widespread emerging market debt distress." [10/11/22]
Rebeca Grynspan | United Nations Conference on Trade and Development:
"The current course of action is hurting vulnerable people everywhere, especially in developing countries. We must change course."
"If you want to use only one instrument to bring inflation down...the only possibility is to bring the world to a slowdown that will end up in a recession." [10/3/22]
Email press@groundworkcollaborative.org to speak to Dr. Rakeen Mabud about the Fed's interest rate hikes and what they spell for our economy.
The Groundwork Collaborative is dedicated to advancing a coherent and persuasive progressive economic worldview and narrative capable of delivering meaningful opportunity and prosperity for everyone. Our work is driven by a core guiding principle: We are the economy. Groundwork Collaborative envisions an economic system that produces strong, broadly shared prosperity and power for all people, not just a wealthy few.
LATEST NEWS
'Complicit in the Genocide': First Muslim Biden Appointee Resigns Over Gaza
"This administration has chosen to uphold the status quo instead of listening to the diverse voices of staff urgently demanding freedom and justice for Palestinians."
Jul 02, 2024
A political appointee at the U.S. Interior Department on Tuesday became the youngest—and first Muslim American—appointee of President Joe Biden's to resign as his administration continues to "fund and enable Israel's genocide of Palestinians."
"Marginalized communities in our country have long been denied the justice they deserve. I joined the Biden-Harris administration with the belief that my voice and diverse perspective would lend a hand in the pursuit of that justice," Special Assistant and Assistant Secretary for Land and Minerals Management Maryam Hassanein, 24, said in a statement.
"However, over the past nine months of Israel's genocide in Gaza, this administration has chosen to uphold the status quo instead of listening to the diverse voices of staff urgently demanding freedom and justice for Palestinians," she added. "I am resigning today from my position as a Biden administration appointee in the Department of the Interior."
Hassanein toldHuffPost that she decided to resign because "I came to understand that even if the agency I'm working at is not producing foreign policy, serving in the administration in any capacity does essentially make you complicit in the genocide of the Palestinians."
Palestine defenders applauded Hassanein's resignation—which made her at least the 11th American official to step down over U.S. support for Israel's war on Gaza, according to HuffPost.
"We welcome this principled resignation by another Biden administration official who took up their post believing they could help the nation, but instead realized they were becoming complicit in the administration's enabling of the far-right Israeli government's genocide in Gaza," said Nihad Awad, executive director of the Council on American-Islamic Relations.
"President Biden, whose administration has lost all credibility on the issue of human rights, must reverse course and end our nation's complicity in genocide, forced starvation, and ethnic cleansing," Awad added. "He must demand an immediate and permanent cease-fire, an end to the occupation, and justice for the Palestinian people."
The Biden administration has been Israel's staunchest supporter, even after 270 days of what United Nations officials, human rights experts, and countries led by South Africa in an International Court of Justice case all call a genocidal assault on Gaza's 2.3 million people. Despite this, Biden has approved billions of dollars in military assistance and provided diplomatic support for Israel.
According to Palestinian and international agencies, at least 37,925 Palestinians—mostly women and children—have been killed by Israeli forces, while upward of 87,000 others have been wounded and at least 11,000 people are missing and presumed dead and buried beneath the rubble of hundreds of thousands of destroyed or damaged buildings.
Israel has also been accused of deliberately starving Gazans—dozens of whom have died of malnutrition—via a crippling siege and blockade of the coastal enclave.
Keep ReadingShow Less
Jared Golden Op-Ed on Trump Called 'Unconscionable Surrender to Fascism'
A political science professor described the Maine congressman's op-ed as "one of the most irresponsible things a Democratic member of Congress has written in recent memory."
Jul 02, 2024
Breaking with many of his fellow Democrats, Maine Congressman Jared Golden suggested Tuesday that former Republican President Donald Trump's return to the White House wouldn't threaten U.S. democracy—and was sharply ridiculed for that take.
"After the first presidential debate, lots of Democrats are panicking about whether President Joe Biden should step down as the party's nominee," Golden wrote in a Bangor Daily News op-ed. "Biden's poor performance in the debate was not a surprise. It also didn't rattle me as it has others, because the outcome of this election has been clear to me for months: While I don't plan to vote for him, Donald Trump is going to win. And I'm OK with that."
"Democrats' post-debate hand-wringing is based on the idea that a Trump victory is not just a political loss, but a unique threat to our democracy. I reject the premise," he continued. "Unlike Biden and many others, I refuse to participate in a campaign to scare voters with the idea that Trump will end our democratic system."
Golden—who represents the "Trump-friendly" 2nd District, a priority for Republicans this cycle—also referenced the insurrection incited by the presumptive Republican nominee after his 2020 loss to Biden, writing that "pearl-clutching about a Trump victory ignores the strength of our democracy. January 6, 2021, was a dark day. But Americans stood strong."
The backlash to Golden's op-ed was swift and strong, with Fordham University assistant political science professor Jacob Smith calling it "one of the most irresponsible things a Democratic member of Congress has written in recent memory."
Veteran journalist Mark Jacob said on social media that "Congressman Jared Golden, an alleged Democrat from Maine, waves the white flag against Trump in an unconscionable surrender to fascism. Maybe he thinks he can cut a deal. The cowards and quislings are making themselves known."
Some critics highlighted that the U.S. Supreme Court's right-wing supermajority—which includes three Trump appointees—ruled Monday that Trump, and anyone else who occupies the Oval Office, has absolute immunity for "official acts." In her dissent, liberal Justice Sonia Sotomayor warned that "the president is now a king above the law."
Trump celebrated the ruling and reportedly is prepared to embrace his expanded powers if he wins in November. The high court decision also jeopardizes Trump's recent felony conviction and three pending cases against him, including two that stem from his efforts to overturn the results of the 2020 election.
"Jared Golden's op-ed today may be one of the worst takes we've seen so far, particularly in light of the Supreme Court's decision yesterday," declared Young Democrats of America president Quentin Wathum-Ocama. "I'm astounded that the congressman has such an absurdly bad take and is apparently ready to give up on an election five months out."
Some journalists and Republicans suggested that Golden's op-ed may be politically motivated, considering the makeup of his district. His GOP challenger, former NASCAR driver Austin Theriault, said: "This is a very phony attempt to avoid accountability. Simple questions for Jared Golden: Does he support Joe Biden for president or not? Does Golden believe Biden is mentally competent or not? He won't say, because he puts politics ahead of Mainers."
Golden, who co-chairs the Blue Dog Coalition, has a history of voting with Republicans on various climate, military, and student debt relief policies. His new opinion piece provoked calls for members of his own party to identify and rally around a write-in candidate "so Maine Democrats have an actual Democratic option in November."
Other Democrats in Congress have contributed to mounting warnings of the threat posed by Trump, who has said on the campaign trail that he would be a dictator on "day one" and "root out" those he called "radical left thugs that live like vermin within the confines of our country."
If elected this year, Trump is also expected to pursue the policy agenda of the Heritage Foundation-led 2025 Presidential Transition Project—or Project 2025—which the Global Project Against Hate and Extremism has described as a "far-right playbook for American authoritarianism."
Congressman Robert Garcia (D-Calif.) said Tuesday that "Project 2025 is a threat to our nation. The conservative radical plan rolls back rights for everyone and allows blatant discrimination against the LGBTQ+ community. It's sickening, and we must do everything to prevent this destructive plan and Donald Trump at all costs."
Biden's poor performance in the debate with Trump last week has prompted some supporters to reaffirm the importance of his reelection, given the alternative, and others to suggest that he should be replaced ahead of the Democratic convention next month.
On Tuesday, U.S. Rep. Lloyd Doggett of Texas became the first Democrat in Congress to suggest that Biden should step aside.
"Too much is at stake to risk a Trump victory—too great a risk to assume that what could not be turned around in a year, what could not be turned around in the debate, can be turned around now," Doggett said. "President Biden saved our democracy by delivering us from Trump in 2021. He must not deliver us to Trump in 2024."
Keep ReadingShow Less
Researchers Warn of Imminent 'Death Spiral' for Rapidly Melting Alaska Ice Field
The Juneau ice field is melting at a rate of 50,000 gallons per second and is possibly heading "beyond a dynamic tipping point," a new study says.
Jul 02, 2024
The melting of Alaska's Juneau ice field—which contains more than 1,000 glaciers—is accelerating and could reach a tipping point much sooner than predicted, according to research published Tuesday.
The study, which was published in the journal Nature Communications, shows that ice loss from the Juneau ice field began accelerating rapidly after 2005.
The paper's authors found that "rates of area shrinkage were five times faster from 2015-2019 than from 1979-1990," while glacier volume loss—which had remained relatively consistent from 1770-1979—doubled after 2010.
"Forty years from now, what is it going to look like? I do think by then the Juneau ice field will be past the tipping point."
"Thinning has become pervasive across the icefield plateau since 2005, accompanied by glacier recession and fragmentation," the study states. "As glacier thinning on the plateau continues, a mass balance-elevation feedback is likely to inhibit future glacier regrowth, potentially pushing glaciers beyond a dynamic tipping point."
Study lead author Bethan Davies, a glaciologist at Newcastle University in England, said in a statement, "It's incredibly worrying that our research found a rapid acceleration since the early 21st century in the rate of glacier loss across the Juneau ice field."
"Alaskan icefields—which are predominantly flat, plateau icefields—are particularly vulnerable to accelerated melt as the climate warms since ice loss happens across the whole surface, meaning a much greater area is affected," Davies continued. "Additionally, flatter ice caps and icefields cannot retreat to higher elevations and find a new equilibrium."
"As glacier thinning on the Juneau plateau continues and ice retreats to lower levels and warmer air, the feedback processes this sets in motion is likely to prevent future glacier regrowth, potentially pushing glaciers beyond a tipping point into irreversible recession," she added.
Study co-author Mauri Pelto, a professor of environmental science at Nichols College in Massachusetts, toldThe Associated Press that the Juneau ice field is melting at a rate of about 50,000 gallons per second.
"When you go there the changes from year to year are so dramatic that it just hits you over the head," Pelto said. "In 1981, it wasn't too hard to get on and off the glaciers. You just hike up and you could you could ski to the bottom or hike right off the end of these glaciers. But now they've got lakes on the edges from melted snow and crevasses opening up that makes it difficult to ski."
As the AP reported:
Only four Juneau ice field glaciers melted out of existence between 1948 and 2005. But 64 of them disappeared between 2005 and 2019, the study said. Many of the glaciers were too small to name, but one larger one, Antler glacier, "is totally gone," Pelto said.
Alaska climatologist Brian Brettschneider, who was not part of the study, said the acceleration is most concerning, warning of "a death spiral" for the thinning ice field.
Pelto said that "the tipping point is when that snow line goes above your entire ice field, ice sheet, ice glacier, whichever one."
"And so for the Juneau ice field, 2019, 2018, showed that you are not that far away from that tipping point," he added. "We're 40 years from when I first saw the glacier. And so, 40 years from now, what is it going to look like? I do think by then the Juneau ice field will be past the tipping point."
It's not just Alaska. Glaciers around the world—from Greenland to Switzerland to Africa and the Himalayas—are melting at an alarming rate. The United Nations Educational, Scientific, and Cultural Organization warned in 2022 that glaciers in one-third of the 50 UNESCO World Heritage sites where they are found are on pace to disappear by 2050—even if planet-heating emissions are curbed.
Another study published last year by researchers at Carnegie Mellon University and the University of Alaska found that even if humanity manages to limit planetary heating to 1.5°C above preindustrial temperatures—the more ambitious goal of the Paris agreement—half of Earth's glaciers are expected to melt by the end of the century.
Keep ReadingShow Less
Most Popular