Inflation is soaring, according to senators

When Federal Reserve Chairman Jay Powell signaled a change to the Fed's statement that inflation is transitory, investors and politicians like Sen. Sherrod Brown D-OH perked up when they were cheered by the Fed's repeated statement that inflation is transitory.

Powell told the Senate Committee on Banking Housing and Urban Affairs that it is probably a good time to retire that word and try to explain more clearly what we mean.

Inflation running at an annual 6.2% rate is the highest in more than 30 years and more than two times higher than the Fed's 2% inflation target.

Brown, who chairs the Senate banking committee, said that the rest of the paragraphs was how important it is to fix the supply chain and the biggest factors that contribute to inflation. It is what happened in the Pandemic that nobody quite foresaw lumber prices, chips, and all of those contributing factors. Brown's colleague and ranking member on the committee, Sen. Pat Toomey R-PA, said more government spending, as proposed in the $1.75 trillion Build Back Better Act, threatens to spark the flames of inflation.

It is still pushing a multi-trillion dollar tax- and- spend plan that will cause more inflation and damage to our economy. The plan is a massive expansion of the welfare state and will be partially paid for by large tax increases that hurt American families and make the US a less competitive place to do business, Toomey said.

Brown defends the proposed new spending, pointing out bills like the $1.2 trillion infrastructure plan and the earlier $1.9 trillion American Rescue Plan Act, which helped reduce poverty and softened the economic blow from the COVID-19 pandemic.

The Fed Chair Powell said the risk of higher inflation has risen but he still expects inflation to fall next year. Brown said employers are using inflation as an excuse to not raise employee wages.

Brown said that CEOs are making high salaries. It's 300 times what the average worker is making, average CEO salary, they keep making more and more and more and more and more and more and more and more, and then they say I can't afford it, and they say we've got increased prices. Toomey called inflation a tax that is eroding Americans paychecks every day. Inflation is growing faster and causing workers to fall further behind, even though wages are growing. Brown agrees with Toomey that it's important to get inflation under control, but also believes that it's important to raise wages. I have implored Chair Powell and Secretary Yellen, but especially Chair Powell, to put workers at the center of our economic policy. The Fed has not done that. Powell said that members of the Federal Reserve will consider increasing the pace at which the Fed stops buying U.S. Treasury bonds and mortgage backed securities at their meeting next week.

Since January, I have warned about the risks of higher and more persistent inflation. The Fed decided to continue its emergency monetary policy, adding fuel to the inflationary fire, long after the economic emergency had passed, Toomey said.

Brown cautioned that people are concerned, but I don't think we should be alarmist. I empathize with people, all of whom are paying higher prices, and are working in every way to cut costs and make it as temporary as possible.