Bernie Sanders Calls Fed Rate Hike Bad News for Working Families

[eridani]

http://www.commondreams.org/news/2015/12/16/bernie-sanders-calls-fed-rate-hike-bad-news-working-families

The Federal Reserve's announcement on Wednesday that it would raise interest rates 0.25 percent was met with strong criticism on Tuesday with Sen. Bernie Sanders blasting the decision as "bad news for working families" and the country's "disappearing middle class."

The rate hike is the first since the 2007 financial crash, and economists have long-warned that employment and wage growth are still far too low to justify the increase.

"At a time when real unemployment is nearly 10 percent and youth unemployment is off the charts, we need to do everything possible to create millions of good-paying jobs and raise the wages of the American people," Sanders said.

"When millions of Americans are working longer hours for lower wages, the Federal Reserve’s decision to raise interest rates is bad news for working families," he added.

Economists are concerned that Wednesday's rate hike will imperil the country's incomplete economic recovery by stagnating job growth and wages. This mostly threatens those at bottom of the employment pyramid, who were most impacted by the recession—and even in the recovery saw national income shift four percentage points from wages to corporate profits.

[JonLeibowitz]

1. I don't think federal reserve policy to have a target of modest inflation is anti-working class

The fed needs to increase its rates so it has some measure of control over inflation which it can use to prevent the next bubble and market crash, which will hurt the middle class.

[eridani]

2. Inflation on what planet?

Does it have good weather? Do the unicorns bite?

[JonLeibowitz]

3. I don't follow.

[eridani]

4. We don't have an inflation problem right now

Therefore interest rate hikes are better saved for such times as when we do.

[JonLeibowitz]

5. Oh, I see.

You are right. But the flip side is that low rates mean lower investment savings on bonds and savings accounts for average Americans. Tough nut to crack; I'm not an economist.

[eridani]

6. Irrrelevant, as most Americans get by on job income or Social Security

My savings account interest has never accounted for more than a tiny fraction of my income.

[n8dogg83]

7. Add to that the fact that the interest rate increase on savings will likely be infinitismally small

while the interest rate increase on mortgages, car loans, small business loans, credit cards and other consumer debt will grow exponentially.

[TexasBushwhacker]

8. I would take a slight rate hike if it meant freeing

up money for mortgages. It's tough to get a mortgage for people that don't have a lot of savings for a down payment. With the average house costing over $200K, a 20% down payment means $40K. How many people have that laying around?