The Federal Reserve’s initiative to “bring wages down” indicates the neoliberal school of thought’s continued influence at the highest levels of economic policymaking.
For the average person, inflation is harmful since it makes purchasing power less effective. However, the current method of limiting inflation is equally detrimental to the general populace since higher interest rates stop economic growth and low salaries. Political economists like David Ricardo attempted to reconcile the premise that labor generated economic value with the thought that paying delivery over a certain level would be detrimental to development in the 19th century. They asserted the existence of a “wage fund,” or a defined sum of money that could be used to pay wages without violating the principles of economics. Thus, wage labor for millennia was something to be avoided and the misery of the socially underprivileged was turned by reforms from the Progressive Era and the New Deal into the cornerstone of full economic citizenship. Anyone involved in the monetary stability of the postwar system, the middle classes mainly, found the wage-price spiral that emerged in the 1970s to be a significant nuisance.