This post briefly demonstrates how it is official American government policy to keep millions unemployed in the name of “fighting inflation.” This is part of a larger story of how prices are stabilized in our neoliberal era: on the backs of the disadvantaged. See: Our current system: Guaranteed involuntary unemployment (which MMT eliminates)
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Related post: Managing price stability only for some, on the backs of millions (our current system)
Disclaimer: The information in this post is my best understanding as a layperson. I am not an expert and do not speak for MMT. I also don’t assert the information in this post to be perfectly accurate. In order to ensure accuracy, you should rely on the expert sources linked throughout.
Here are the two objectives of the Federal Reserve, as mandated by Congress: “(1) maximum employment, which means all Americans that want to work are gainfully employed, and (2) stable prices for the goods and services we all purchase.” From that same page (emphasis added):
The maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the job market. These factors may change over time and may not be directly measurable. As a result, the FOMC does not specify a fixed goal for maximum employment; rather, the FOMC’s policy decisions must be informed by its members’ assessments of the maximum level of employment, though such assessments are necessarily uncertain and subject to revision.
In fact, a 2017 study by the a London School of Economics and Paris School of International Affairs concludes: “Despite unavoidable caveats, we find robust evidence of a systematic impact of the ideological features of their alma mater on FOMC members’ voting behaviour – impact that is found to be more important than the other traditional determinants of central bankers’ actions.”
In other words, the maximum level of employment is determined primarily by the ideology and guesswork of those who actually make these decisions (and who are definitely not desperate for a job, shelter, or healthcare).
