Fed Chairman Jerome Powell has instituted a series of rate hikes in an effort to curb inflation. The theory is that these increases in interest rates will curtail the runaway spending that has caused prices to spike as weary consumers emerge from the pandemic and eagerly spend the cash they had been hoarding. By making it more expensive to borrow, people are discouraged from purchasing new cars, homes and other high ticket items.
Predictably, the stock market reacts in a negative way, with stocks taking a nose, wiping out billions of dollars in savings. And those hurt the most are those who can least afford it; namely seniors who are seeing their lifetime savings evaporate.
For years, these same seniors have been making sacrifices so they could live out their Golden Years. They followed the advice of financial planners to put aside part of their income in order to be able to enjoy the fruits of their lifetime of labor. They survived the runaway inflation of the 1970s, the burst of the Dot.com bubble of the 1990s, the myth of trickle-down economics and the Great Recession of the early 2000s.
Now, they are seeing it may have been all for naught as their IRAs and 401ks disappear in a decidedly fickle marketing gambit. They are faced with the double-whammy of having to pay the same higher cost as everyone else while having less cash at hand to pay for it. And since they have had a lifetime of disciplined spending, they are unlikely to wrack up the very credit card purchases these rate hikes are trying to curtail.
The situation has been exacerbated by a banking crisis that has an already jittery public on edge. The failure of two major banks, along with several others teetering, may be just the wake-up call these spend-happy Americans needed to curb their buying sprees. But, instead of permitting this calamity to ease consumer spending, Powell announced yet another rate hike which caused stocks to plummet once again.
Adding insult to injury, Republicans are proposing tying raising the debt limit to measures which will further hurt those who need it most. They are threatening to hold this vital legislation hostage until they get concessions aimed at cutting programs vital to the poor and elderly, including SNAP (more commonly known as Food Stamps) and Social Security, despite the vehement denials of Cruella deVille co-player Majorie Taylor Greene among others in her deplorable faction.
While seniors are used to tightening their belts in difficult economic times, it’s particularly cruel to force them to do so when they have spent their lives making sacrifices only to see they were useless in a time when they need it most. Powell’s actions have done little to curb inflation and have only caused unnecessary anguish for those who can least afford it.
Harming seniors is not the answer.
Editor's note:
With this entry, Chris Waldron earns the Lean to the Left award for toughness as he wrote this one-handed having broken his arm, which is on the mend. Thanks, Chris!