 The U.S. Federal Reserve is meeting on Tuesday and Wednesday to decide on the country's monetary policy. This is even as the country has faced an inflation crisis. While the rise in prices has tapered down a bit, it continues to affect millions of people in the country. What is the state of inflation in the country and what are the reasons behind it? Eugene Perrier of breakthrough news explains. The inflation situation in the United States continues to be very significant for especially working class people, people trying to make two ends to make both ends meet as it were. Now, obviously the velocity of inflation over the past couple of months has started to slow, but overall inflation on a year on your basis very high. So compared to August of 2021, overall prices in the United States on all goods are up 8.3%. But wages between August of 2021 and August of 2022 have only gone up about 5.2%. So you have ultimately about a 3% effective wage cut affecting working class people in the United States, despite the fact that wages have technically been growing. And you can look at how this really plays out because there's about 150 million people in the United States who have told the Census Bureau that they have at least some trouble making their week to week expenses as they go through life. And a lot of that is due to inflation in March of this year. That was like 130 million people. So you've seen a lot of significant growth in terms of the amount of hardship that's taking place. Now, some of the things that are continuing to drive inflation in a big way. Now, one of them is energy. It continues to be energy. Now, this is a little sort of a paradox there because, for instance, the price inflation for gasoline has gone down 10.6% between August and July of 2022, but it's still up significantly about 25% over where it was in August of 2021. We're still in that food away from home. So people are continuing to sort of get into it's not really a post pandemic reality, but feeling like it's one going out more doing more things like that. And you have these businesses, restaurants and others that are raising their prices. But really the core is energy more than any other factor. But we're also seeing some, you know, rent had been a factor, but that seems to also be lessening, but it's still another factor that has has hit a number of different people. But energy really continues to be the core. Food also is playing a significant role. But what we're seeing is that July inflation remained flat. In August, it was about a 10th of a percentage point increase. So it does seem at the very least the pace of inflation is changing. But overall prices are up quite significantly. And at the end of the day, as I said, at the start of this, basically the situation with inflation is it's gone up so high compared to wages that the average person has had about a 3% wage cut in the last year. The US Federal Reserve has taken a very aggressive stance on the issue of inflation. The standard method to combat inflation has been to raise interest rates. Is this the solution to the problem? If not, why is this the most popular solution? And what is the thought process behind it? You know, the Federal Reserve is in public, essentially saying that they believe that the slowing velocity of inflation is just a false dawn, which requires them to be even more aggressive. But they're being so aggressive, it raises a lot of questions about that. I mean, certainly, you know, there's a key question first and foremost about whether what they're doing, which is increasing interest rates, which very easily could cause a serious economic downturn, if that's actually worse than inflation, if the cure is actually worse than the disease, that's one question in and of itself. But obviously, the real question is is what is causing and what is driving inflation? The Federal Reserve is continuing to premise its basis that they need to continue to push on the issue of inflation on two totally erroneous concepts. One, that the economy is overheating. And two, that wages are driving the issue of inflation. We've seen the latter is completely fake. For every dollar of inflation, 8 cents is going to wages. 54 cents is going to corporations patting their profits. So when you look at it like that, the reality is, is that clearly it's not wages and that obviously, you know, quote unquote, actual GDP is compared to potential GDP. That's how you measure whether or not the economy is overheating that, you know, actual continues to be below potential. So these two data points are actually totally false, but they create the basis by which the Fed justifies interest rate hikes as the best medicine for inflation. If you acknowledge that profits are really driving inflation, then the best medicine becomes taxes on the rich. But as we've seen over the past year, the rich are doing everything possible through their political proxies to prevent that, it would mean things like price controls. But that also would mean that corporations wouldn't be able to profiteer unwillingly. It could mean things like rationing. Right now in America, you paychecks your ration card. You could have a much more equitable system, which would at least spread the pain around and not make it whoever has the gold makes the rules in terms of the goods you're able to access. But all of these different functions and ways of addressing inflation, despite the fact that they are more actually related to the causes of inflation, and some of which which are outside of the US government to control to some degree in terms of the war in Ukraine and so on and so forth, they have influence for sure. You know, all these different things when you look at what's actually happening, and the actual solutions, despite all of that, you still have this big push for interest rate hikes, because ultimately, with the Federal Reserve, which is really a cipher for Wall Street is saying is, okay, we have to do something about inflation, but we don't want to do anything that's going to balance the economy, if you will, on the backs of the richest people, we want to balance it on the backs of the working class. So they're promoting false reasons for why inflation is happening, which allows them to promote false solutions, which allows them to accomplish their ideological goal, which is really just to allow capitalist to be the least stave, by the way inflation is addressed, and make sure that workers ultimately bear the brunt, and that the labor movement, and in particular, which is growing in the United States, in a very significant way over the past couple years, loses a lot of steam and leverage, because of the increased unemployment that will come from deeper economic malaise that seems likely if they continue to make these major, major increases in interest rates. And you know, they are talking about going to 3.25% interest rate. That's $325 per $10,000 of debt. So that's a huge imposition on anyone with a mortgage, anyone with student loans, anyone with credit card debt, anything like that. So you can see that it's really average everyday people getting squeezed on both ends by the Federal Reserve, so that the richest people in this society can get off, if not unscathed, as unscathed as possible. The solution of raising interest rates is the most used solution across the world. But if this does affect the economy, what other alternatives are there before central banks and policymakers? Why are alternative solutions not considered by countries? You know, the way I look at raising interest rates, that's like the blunt force trauma approach to addressing inflation. And we have to look at actual causes. And when we can look at things like, for instance, profits, driving inflation, we know we can tax the rich and that could curb it. But we also can talk about price controls. I mean, ironically enough, you see that the G7 nations are willing to put in price controls as it's a sanction against Russia to try to destroy the Russian economy, but they won't talk about price controls for a runaway inflation right now. I mean, taxing the rich, you know, there's a little bit of lag time there. But if you can tell as we can, I mean, the companies themselves are saying in their earning statements, we're increasing our prices specifically so we can make huge profits in the midst of increased costs so that our profits won't be eaten up by our increased costs. So if they're openly admitting to this, then why, especially on critical goods, would you not put in something like a price control? I mean, there's really actually no reason why not. And there's also no reason why prices should go up because there actually are shortages. Some things, there are shortages of them, and that tends to increase prices and capitalism. But the reality is, is you could have a very different type of system that just says, well, if there's only so much of X, we're going to equitably distribute X to the masses of people so that just because you make a million dollars rather than $50,000 doesn't make a difference in your ability to gain average everyday goods. So I think that, you know, it's a multiple process in terms of where we are now. But I think the deeper question that we have to ask ourselves is these inflationary crises are pretty consistent over the life of capitalism. I mean, anyone who studies history, you know, you're always reading about some sort of inflationary price spiral, making things bad, and this or that century or whatever it may be, of course, most recently, for us in the late 1970s. And we have to, I think, start looking at how inflation is really sort of the punishment that capitalism puts in for success. Inflation is really driven by the growth of the capitalist economy and the internal dynamics around it. And when you have an economy that actually introduces negative externalities by virtue of its success, not its failure, I think you have to start questioning whether or not we need to look beyond capitalism as a social system, because these things continue to happen, just like economic crises continue to happen. But I think at the end of the day, it's be far more effective to finally put a clamp on this unbelievable profiteering that's happening in the United States and in Europe, around energy, around food, around automobiles, and all these different sort of aspects of it and reduce the prices by just making it impossible for them to raise the prices and making sure that there are windfall profits taxes on the sky high profits they're making so that there's actually no incentive for these corporations to just continue to drive up inflation to pad their own pockets.