There are man-made fixtures all around us. This is well-known but why is it an important question? It is important because of the facade of truth that becomes cemented in mind, thereby forgetting the human nature that comes with these fixtures steeped in privilege, selfishness and greed. Leading to positions that take advantage of other peoples. Therefore, we must not take for granted an existence created within our reality bent in the ways of the creators. Or else you will be left behind to hold the stick; you and your children and grandchildren. Hence, Critical Thinking is necessary as it thinks about thinking in relation to thought and rethinks the thought that was central to thinking that has positioned our thoughts and realities. What is Critical thinking? In its simplistic and basic definition, it is thinking about thinking and what was previously or is the current thought that builds on or debunk information that leads to new discoveries of thought and positions that improve life. It is deliberately and intentionally reflecting on truths, challenging oneself whether through introspective discourse or engagements with others. It deconstructs reality by scrutinizing current knowledge and truths we have about ourselves. Critical Thinking is usually within the realm of the postcolonial, postmodern, skeptics or those who are fighting for better leading to effective change and progress.
This brings us to Critical Economics, which when placed within what we have said about critical thinking is then thinking & rethinking ideas and principles about economics that has come to shape how we allocate or distribute resources within society. It means looking at the inequity and distributional challenges in society today from an economic that aims to allocate resources fairly and efficiently. However, A Free-Market system has not achieved that, what economics was developed or supposed to do – distribute evenly within a perfectly competitive market. It is full of nepotism driven by neo-capitalistic forms of economics. Within a Capitalist society such as the US, where buyers & sellers transact business & set prices. However, the Feds have raised interest rates a third time in the last few months which directly affects prices as it affects costs of financial instruments. The cost is passed onto the consumers. There’s a story in Yahoo News regarding the stand-off on interest-rate hike by the Feds. The story entitled: Federal Reserve and the markets in standoff on rate hikes:
WASHINGTON (AP) — Sooner or later, either Wall Street or the Federal Reserve has to blink. Nearly a year into the Fed’s drive to quash inflation by hiking interest rates at a blistering pace, investors still don’t seem to fully believe what the Fed warns is coming next: Higher rates through the end of the year, which could sharply raise unemployment and slow growth….Fed speakers last week underscored a contrasting message: They expect to raise their benchmark rate above 5%, modestly above Wall Street’s forecast. Doing so would likely lead to even higher borrowing rates for consumers and businesses, from mortgages to auto loans to corporate credit. What’s more, some Fed officials reiterated they plan to peg rates at a higher level through the end of this year.
Further increases in interest rates affects behaviors in the market. People usually spend less and park their money in investment schemes or high-yield savings accounts if they know they’re ‘gonna’ get higher interest rates. Borrowers will have to pay more on their loans and therefore, less people may want to access loans. This drives down demand, especially when demand is outstripping supply given the amount of money in the economy and the limited supply. However, those without money or limited funds will bear the brunt of the cost stemming from the increase in interest rates. Raising interest rates must be understood in terms of who benefits? Lenders, Bankers, the rich, those with money who can afford to lend and garner greater returns from a slowing economy, and those who can afford to park millions in investments and high-yield savings accounts. The rest will see a freeze in salaries and wages, increase in mortgages and loans, some consumer goods given the increase in production and labor costs coming from higher interests on business loans. The cost is passed to the working class so as to keep them working (class) and to ensure supernormal profits for the rich. The Feds, comprised of wealthy investors, financiers, “old money” and politicians who control monetary policies have come to supply a doctrine enshrined into psyche and academia without challenge. If the Feds increase rates to mob-up-liquidity, it means then that they are increasing the cost of living on the working class so that they can retreat to the usual, working paycheck-to-paycheck, because the thinking is that there’s too much money in the economy? But Who really has the money in the economy, the wealthy or the poor working class who will now suffer the wrath of the FEDS interest-rate hikes?
The Feds are interventionists, much like the technocrats leading the Structural Adjustment projects that had made the Caribbean into debt-burdened havens and dependent capitalist states. The IMF, World Bank, IDB all represented a bureaucratic machinery that controlled the monetary system in the global south countries where they had lent monies at interest rates that affected the economies of the Caribbean. These structuralist Banks of the “Washington Consensus,” (See the concept of Washington Consensus in “Neoliberalism, Globalization, Income Inequality, Poverty and resistance,” 2021) much like the Federal Reserve represented wealthy groups, nations that helped to influence the terms or conditions of the monies loaned to the Caribbean. The newly independent countries spent much of their time making interest payments while their peoples lack the resources needed to improve their lives to compete in the global economy. The world bank and Technocrats of the “Washington Consensus” have apologized, recognizing their strategy of implementing structural adjustment too rapidly and inhumanely. Today, the world bank has a limited role in how it lends funds to poor countries and has forgiven some of the debt with conditions, still. However, the interest rate hikes in post-industrial countries are pressuring international banks to lend at higher rates as well, which also stems from the demands of its funders and financiers. As such, The Caribbean might be faced with a similar situation which had started in the 1970’s where OPEC caused many Caribbean countries to seek loans that they were unable to pay back.
The Feds represent a bureaucratic machinery much like the IMF and the world bank, ran by technocrats who represents government and wealthy bankers and financiers. The technocrats employ the interests of their members and funders. The Feds may have similar interests, yet it has protections in our laws given its other responsibilities to print and regulate money and maintain the value of the currency. Yet, there are those who have called for the abolition of the Federal Reserve for something better. The FEDS itself was created as something better. I discuss the Federal Reserve when I had interviewed John Anthony Castro, 2024 US Presidential Candidate, some time ago, in May of 2022, on The Neoliberal Round Podcast. He explored the idea behind it and plans he has for it if he were to become president of the U.S.
Therefore, the postcolonial man must be a critical thinker who is a skeptic. One who is suspicious of history and its creation of the present. For like Kant, we live in the reality of a history that is a result of human nature and circumstances. Kant’s critique of pure reason and practical knowledge including Newtonian physics being the foundation of knowledge about everything unchanging and categories of the mind. He challenged as dangerous any study of moral codes as foundation to any knowledge outside of the varieties of human natures. Social intuitions represent traditions of knowledge steeped in hegemony and privilege. We will continue this inquiry in my upcoming Book Neoliberal Globalization Reconsidered. It is Neoliberal Globalization Reconsidered because of the Neo-capitalist nature of Globalization today. Neo-capitalism is the system behind neoliberalism. we will also discuss this in Caribbean Thought Lecture series at The Jamaica Theological Seminary and my Studies at Georgetown University.
News Update on The FEDS raising interest rates again.
Federal Reserve raises key interest rate 0.25%, signals more hikes likely
The Federal Reserve announced Wednesday that it had raised its key federal funds rate by 0.25% as it seeks to keep putting downward pressure on economic growth in its bid to slow inflation.
It was the smallest rate hike since the central bank began an aggressive campaign that has produced nearly monthly rate hikes since last March.
The Fed said in its statement Wednesday that more rate increases are most likely coming.
But in his news conference following the rate-hike announcement, chairman Jerome Powell said he and other Federal Reserve officials believed “a couple” more hikes would likely suffice to reach a high enough interest rate at which the Fed would feel comfortable pausing the increases.
That helped send stocks higher in Wednesday trading.
It’s all part of an effort to slow price increases that have bedeviled U.S. consumers.
While there are now ample signs that inflation is, indeed, decelerating, some indications suggest that the economy is already reflating, which could send prices creeping up again.
According to a Bloomberg index, financial conditions in the U.S. have eased to their loosest level since last February, meaning it is becoming easier to borrow money and sell goods again. That’s reflected in declining average mortgage rates, which have fallen back to 6.13% after having hit a high of 7.08% in November.
In addition, rising prices of commodities like oil, as well as a weakening U.S. dollar and improvement in the performance in the stock market, have all contributed to some cautious optimism about the economy.
The Feds decision to increase the interest rate by 0.25 % with more hikes coming suggests that they have learned from the mistakes of the IMF and world bank who at one time applied structural adjustment too quickly which affected the most vulnerable. Instead, they are applying incremental increases so as to minimize the effects that these increases may have on the poor and working classes and to soften any blow back from investors on wall-street and effects these will have on production costs, wage, and capital investments needed to continue to spur the economy towards needed development in infrastructure of the US economy. The inflation rate seems to be under control, which many believed was a direct result if the intervention by the FEDS to implement interest rate hikes over the last quarter.
Mr. John A Castro, President of Ai Tax, Castro and Co. and US Presidential Candidate stated that: Raising the interest rates is necessary. Unlike Trump, Biden is doing what’s fiscally responsible. We need a recession to bring stability back to the markets, level out overvalued companies, and get inflation under control. 2024 will be a bull year. Mr. Castro makes an interesting point. “We need recession…” followed by an explanation – “to bring stability back” So, how does recession achieve this? Recession is a bad word for some people, not all, but what about those who are affected in the short run, such as the working class, poor and vulnerable peoples who have to bear the brunt of the effects of “mobbing up liquidity when they are without much liquid?”
Note: There has been massive layoffs in every major industry, including, the tech, food chains and entertainment. With the expected lower tax returns, growing layoffs, interest-rate hikes, lingering inflation, etc., it seems a recession is looming. The signs are evident, and many economists have been alluding to this. The FEDS interventions are not working, and it seems to be affecting both Wall-Street and Consumers. Nevertheless, the consumers or the working class will experience the burden. We may need more Debt Mentors like Jeannette McKenzie Taylor.
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We ask the question in a poll available on our Twitter and LinkedIn Pages:
| Why do the #Feds raise #interest-rates? |
| A. To Mob-up liquidity. |
| B. To reduce inflation. |
| C. To Ensure Higher Returns. |
| D. To Maintain The Status Quo. |
Why do the #Feds raise #interestrates? Reflections @ https://t.co/7zpZkH05XA
— Renaldo C. McKenzie (@RenaldoMcKenzie) January 27, 2023
Host/Producer: Rev. Renaldo McKenzie a Doctoral Candidate at Georgetown University but may switch Doctoral programs to University of Pennsylvania. Renaldo is a Lecturer and Author of Neoliberalism, Globalization, Income Inequality, Poverty and Resistance.
Renaldo graduated from The University of Pennsylvania with a Master of Liberal Arts and a Master of Philosophy. Renaldo also studied Philosophy at the University of The West Indies, Mona in Jamaica briefly, before he migrated to the US, where he is now a US citizen residing in Philadelphia. Renaldo is working on Neoliberal Globalization Reconsidered, a second book with contributions from Prof. Emeritus Dr. Martin Oppenheimer.
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