Ross: I’m getting ahead of rising interest rates, and so should you

May 5, 2022, 7:29 AM

Federal Reserve Chairman Jerome Powell (Getty Images)...

Federal Reserve Chairman Jerome Powell (Getty Images)

(Getty Images)

The head of the fed – the fed-head – Federal Reserve Chairman Jerome Powell, a man famous for complex answers, spoke very clearly yesterday:

“Inflation is much too high,” Powell said.

And he explained that, among the causes, are wage increases that are also too high:

“Wages are running at the highest level in many decades. That’s because of an imbalance between supply and demand in the labor market,” Powell continued.

“So we think through our policies, higher rates, for example, of vacancy filling and things like that, and more people coming back, and we’d like to think that supply and demand will come back into balance. Therefore, wage inflation will moderate to still high levels of wage increases, but ones that are more consistent with 2% inflation.”

And when he says he hopes that wage increases will “moderate” – that can mean only two things: that more bosses have to say “no” when you ask for a raise, or you have to stop asking for raises – or at least stop asking for raises above 2% a year.

So, let’s think this through.

Mr. Powell is going to keep raising interest rates until those things happen, which means credit card and mortgage interest are going to go up and up.

So, if we want to get the Fed to stop these increases – which historically have touched off recessions – we have to change our behavior! ASAP!

Those of us who’ve gotten used to sitting at home have to go back to work, now–and stop expecting big raises. And unions have to compromise.

Dave, there you go again, beating up on the middle class. But I’m just telling you what has to happen if you want to prevent a Fed-induced recession.

I’m just laying out the choices.

However – there is another option – open up immigration. Let more labor flow in – that really controls wages and inflation.

And if you don’t like any of those ideas – then my advice is to get yourself on the other side of the interest equation. Start collecting interest instead of paying it.

U.S. Treasury I-Bonds now pay 9.62%. You can only buy $10,000 worth a year, but if you have a big family and they all happen to have 10,000 dollars – maybe because you were feeling generous with your nest egg – not a bad income stream.

The only thing you should not do…is nothing, because inflation is much too high, and Powell is clearly not backing down.

Listen to Seattle’s Morning News weekday mornings from 5 – 9 a.m. on KIRO Newsradio, 97.3 FM. Subscribe to the podcast here.

Dave Ross on KIRO Newsradio 97.3 FM
  • listen to dave rossTune in to KIRO Newsradio weekdays at 5am for Dave Ross on Seattle's Morning News.

Dave's Commentary

Dave Ross

baby branding...

Dave Ross

Ross: Maybe more Americans should consider baby branding

According to Bloomberg, some anxious American and European parents have been hiring branding consultants to name their baby.

4 days ago

ross graffiti...

Dave Ross

Ross: This level of graffiti is like defacing the Great Pyramid

Dave Ross: Graffiti on the highways is bad enough, and to have it center stage at the city’s front door is taking tolerance too far.

5 days ago

low income housing homelessness...

Dave Ross

Ross: New Seattle low-income housing costs over $134M to address homelessness

If you’re wondering where you can find that low-income housing in Seattle we keep hearing about – I can give you the address. 

6 days ago

stop debt crisis...

Dave Ross

Ross: Nobody in D.C. is actually going to stop the debt crisis

I think I’m going to have to accept that the debt crisis is just not as big a deal as all the news coverage is making it out to be.

6 days ago

taxes national debt Ross...

Dave Ross

Ross: The only way to avoid more taxes might be world peace

Dave Ross: If you want to avoid more taxes, then the dumbest thing you could do would be to cut the new funding for the IRS.

7 days ago

ross trillions taxes stolen...

Dave Ross

Ross: Trillions in taxes are being stolen by the wealthy

I stress this is money that could be collected without raising general tax rates. It’s already owed. It’s been shoplifted from the treasury.

8 days ago

Sponsored Articles

Internet Washington...

Major Internet Upgrade and Expansion Planned This Year in Washington State

Comcast is investing $280 million this year to offer multi-gigabit Internet speeds to more than four million locations.

Compassion International...

Brock Huard and Friends Rally Around The Fight for First Campaign

Professional athletes are teaming up to prevent infant mortality and empower women at risk in communities facing severe poverty.

Emergency Preparedness...

Prepare for the next disaster at the Emergency Preparedness Conference

Being prepared before the next emergency arrives is key to preserving businesses and organizations of many kinds.

SHIBA volunteer...

Volunteer to help people understand their Medicare options!

If you’re retired or getting ready to retire and looking for new ways to stay active, becoming a SHIBA volunteer could be for you!

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.

Comcast Ready for Business Fund...

Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.

Ross: I’m getting ahead of rising interest rates, and so should you