Armstrong Economics Blog/Interest Rates
Re-Posted May 24, 2017 by Martin Armstrong
There are those in the Fed who are desperate to find an excuse to raise interest rates. The one being bantered about is the Fed needs to raise rates to help the poor. Yes – you heard correctly. To protect the poorest Americans, the argument is that the Fed needs to raise interest rates faster according to Federal Reserve Bank of Kansas City President, Esther George. She said “inflation is a tax and those least able to afford it generally suffer the most.” Her twist is focused narrowly on just rental inflation, which she said will continue to rise if the Fed doesn’t take steps to tighten monetary conditions.
The idea of inflation as a tax that hits the poor the hardest is by no means a new theory. Of course you must ignore the fact that interest the poor pay on just about everything is far higher because the Fed wanted to fight inflation back in 1980 and had to abandon the usury laws in order to raise rate to 14%. As always, they never put back whatever it is they suspect for some solution. The Fed is responsible for the poor paying interest rates at over 20% to live on credit cards.
If the Fed really cares about the poor, knock off the BS and restore the usury laws. Oops! The banks would like that now would they!