US: Amid surging prices, Fed raises specter of renewed class struggle
Published on WSWS, by Andre Damon, 17 July 2008.
… The US ruling elite is determined to do everything in its power to transfer its own enormous losses onto the backs of the American working class. The unlimited bailout power being called for by the Treasury and the Fed constitutes one part of this attempt. The systematic drive to slash real wages in order to finance the return to profitability constitutes another.
Bernanke’s testimony came amid a near-meltdown of nearly all measures of US economic stability. He warned of “numerous difficulties” facing the US economy. In his testimony before the House Financial Service Committee, he cited “significant downside risks to the outlook for growth,” while also acknowledging that “upside risks to the inflation outlook have intensified.”
Under these conditions, the Fed is effectively powerless to shift interest rates one way or the other, fearing either further financial destabilization or an inflationary spiral triggering a new wave of wage struggles by American workers.
The concerns expressed by Bernanke were also reflected in the minutes released Wednesday from the Federal Open Market Committee meeting held on June 24-25.
Given fears of the social consequences of spiraling inflation and the expectations it could generate, the Fed’s policymakers predicted that the central bank’s next move “could well be an increase in the funds rate,” the minutes said … (full long text):