The combination of these two things is truly bizarre, because the Fed has more power than any institution over everything about work in America.
Here’s how the Fed does it:
The Fed largely sets short term interest rates. If it lowers interest rates it heats up the economy, because cheap money makes it easier for entrepreneurs to start new businesses, for old businesses to expand, and for everyone to borrow to buy expensive stuff like homes or cars. That in turn generates new jobs and lowers the unemployment rate. And low unemployment takes leverage away from employers and gives it to employees, making it far, far easier for everyone to get raises and demand decent working conditions.
Meanwhile, the 0.1 percent who actually own and operate the country generally do not want full employment — and keep a close eye on the Fed to make sure it doesn’t make it happen. Why? Straightforward class conflict. For instance, a current Ohio business owner who’s feeling pressure to raise wages to attract workers recently told the New York Times, “I sometimes wish there was actually a higher unemployment rate.” Full employment would also tend to raise the rate of inflation, thereby reducing the value of government and consumer debt — which is largely owned by the creditors at the top of the economic pyramid – and relieving the burden on all the debtors down below.
So the Fed sits right at the center of American politics. Yet for most of us, it might as well be invisible.
How can this be?
The explanation is a phenomenon known in anthropology as “social silence.” Here’s how Gillian Tett, the U.S. managing editor of the Financial Times, describes it: