The Federal Reserve is implementing a ‘soft landing’ strategy that prioritizes big businesses and financial interests over the working majority, in contrast to 2008 when the market crashed and bailouts favored large corporations at the expense of taxpayers. The current approach involves protecting these interests upfront, ensuring their stability during this economic downturn.

Fed “losses” are banks “gains” in terms of revenues, that ultimately become net income and turn into capital. The fed bought up overpriced bonds from financial institutions like Goldman Sachs, which wasn’t a significant issue when interest rates were under their control between 2008 and 2022. However, the loss of credibility on inflation led to rate hikes, causing accumulated losses.

The Fed chairman has stated that small businesses will suffer while big businesses remain strong due to their cash reserves. This strategy comes at a significant cost for average individuals who may face unemployment and potential loss of homes as they bear the brunt of the economic fallout.

Rate hikes and macro-management of money markets are designed to make borrowing expensive, protect big banks, and reduce demand by pushing small and mid-cap stocks into bankruptcy. This approach seems poised to result in further consolidation and monopolization of capital.

  • queermunist she/her@lemmy.ml
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    2 months ago

    They’ll have to, but that invites reprisal from the hegemon. Already 2/3rds of countries have some form of sanctions, though, so that tool is probably not going to be too effective moving forward.

    Which means war is back on the table.

    • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPM
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      2 months ago

      Right, once you sanction enough countries, then you end up sanctioning yourself. Hence why western economies are in a tailspin now. The war could be back on the table, but here too the west has a problem of having become deindustrialized. As far as I know, the current situation is historically unprecedented. Never has an empire outsourced so much of its production capacity to countries that are now becoming its rivals. It’s not clear to me how the west can solve this problem since you can’t just magically will skilled labor and factories into existence. It’s going to be a decades long project even if there was a serious commitment to doing that. Meanwhile, the rest of the world isn’t going to be standing still during that time either.

      • queermunist she/her@lemmy.ml
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        2 months ago

        Yeah I was listening to something the other day about the onshoring attempts for chip production and I was struck by how there’s just no skilled labor for doing any of this shit. When I took a semester of carpentry classes my prof always said that we won’t really understand the job until we get experience, and until then we’ll be “dumb college kids”. It made me think of that - we have electronics engineers and software engineers and whatnot, but no one knows how to use the actual machines to do real work.