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Comment by NoPedantsThanks | Hacker News Reader

Especially at a time when everyone is caterwauling about "inflation" (and rightfully so) but very few are talking about the REAL cause: monopoly/oligopoly and straight-up price-gouging. We have what, four meat processors in the USA, and after whining about a "labor shortage" they reported 90% profit increases. NINETY PERCENT.

Meanwhile, the Fed fecklessly raises interest rates over and over, refusing to acknowledge that it didn't work because the conventional economics-textbook wisdom that money supply dictates inflation wasn't the biggest factor here.

Not to get into a wider political debate, but the Biden administration's (and the Democrats') failure to call out the fleecing of America by monopolies represents their limp or nonexistent messaging overall. And when it costs them the White House, it will cost us all a lot more than expensive meat.

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I'm not a fan of the Fed, but they've basically got one tool at their disposal - interest rates - and a mandate to, roughly, keep the wheels on the economy*. I think that since at least 2008 that's been the wrong tool for the job, but all the other tools are held by Congress, which basically refused to do anything useful for the economy out of principle. It's absolutely the case that lowering interest rates wasn't the best policy for the last decade+, and it's also the case that the Fed was the only entity actually trying to do anything, so interest rates is what we got.

* The Fed's got a mandate for price stability and employment, but broadly speaking the social expectation is that they're keeping the economy afloat, and I expect that's how they view themselves as well. I'm not arguing they're doing a good job or that that's what they should do, but I think that's the broadly-held view of their role.

Absolutely. Not blaming the Fed at all, because you're exactly right: Nobody else was doing anything except waving their hands and feigning helplessness.

> Meanwhile, the Fed fecklessly raises interest rates over and over, refusing to acknowledge that it didn't work

The interest rate hikes did work. The inflation rate has dropped by over 5% from it's peak [1]. Real wages rebounded right after the Fed started raising interest rates [2].

[1] https://fred.stlouisfed.org/graph/?g=rocU

[2] https://fred.stlouisfed.org/series/LES1252881600Q

HAS dropped, way later. Not to mention that this is correlation, not necessarily causation.

It wasn't much later. The Fed started raising interest rates in March of 2022, and inflation peaked 3 months after that. The ability of firms to "price gouge" is evidence of monetary inflation, so I'm not sure why you'd be so opposed to interest rate hikes.

"The ability of firms to "price gouge" is evidence of monetary inflation"

Where do you get that? It's far more likely evidence of monopoly/oligopoly power.

Monopoly power isn't mutually exclusive with monetary inflation. The competitive landscape didn't significantly change in 2021 when inflation started to rise. That firms were able to increase their profits significantly during this period indicates an increase in aggregate demand, which suggests monetary inflation. Even if monopoly power was a factor, it wouldn't be able to be realized without the increase in demand.

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