Life has changed substantially for ordinary working-class Americans in the first two decades of the 21st century. The deification of technology, the growth of globalization, the harrowing financial events of 2008 followed by the Great Recession, and the COVID-19 pandemic have left them struggling psychologically, physically, socially, and economically.

Growing income and wealth inequality were on the radar screen long before the coronavirus pandemic, but the pandemic has made the problem more obvious and urgent. The actions of the Federal Reserve (Fed) have widened the gap. Quite apart from persistently low interest rates, there is the issue of inflation.

Last August, Fed Chair Jerome Powell introduced a policy that not only allows but welcomes an inflation level above 2 percent. The Fed assumes it will be able to just snap their fingers and stop inflation at the point they like, which is the pinnacle of hubris.

Inflation matters. It tends to redistribute income and wealth toward groups that are better able to hedge against inflation by sheltering their assets in ways that earn decent returns.

But for the ordinary American, prices that rise faster than wages mean a decline in real income, less purchasing power and lower living standards. Inflation coupled with wage stagnation is eating away at the working class.

While the cost of many discretionary goods has fallen during the pandemic, basic necessities such as housing, healthcare, education, and food are absorbing an ever-larger portion of the incomes of ordinary Americans.

The cost of groceries has been rising at the fastest pace in decades since the pandemic seized the economy. It’s as if working-class Americans are involuntarily observing Lent all year round. They experience life at the sharp end.

In the United States, the Consumer Price Index (CPI), which reflects retail prices of goods and services, including housing costs, transportation, and healthcare, is the most widely followed indicator of inflation. Food inflation is a major part of the CPI.

But the Fed generally focuses on “core inflation” or “core CPI.” This excludes non-discretionary items such as food and energy prices and can give a misleading picture of inflation trends. In the real world, people can’t exclude food from their weekly budget.

According to the latest inflation data published by the U.S. Labor Department’s Bureau of Labor Statistics, another light, or as they now say, lite, read, food prices have increased by nearly 4 percent in the last year, higher than at any point since the 1970s.

The increases are even more dramatic for some food items, with beef and veal prices up 25 percent year-over-year, egg prices up 12 percent, potatoes up 13 percent, and tomato prices up 8 percent.

The report is broken into price changes for “food away from home” and “food at home”. In November, the categories registered year-over-year increases of 3.8 percent and 3.6 percent, respectively.

Rising food prices impact everybody, but they are always top of mind for ordinary working Americans. Even more affected are the poor and the unemployed because they are unable to afford basic necessities. Cutting back on food budgets is one of the first things people do to make ends meet.

Central bankers suffer from a Copernican complex – the belief that the sun and planets revolve around them. Real world experience and history demonstrate that inflation can’t be controlled like a thermostat. But one thing you can be certain of is that inflation has a painful effect on working class Americans.

As the COVID-19 pandemic recedes, the national goal should be to Make America’s Working Class Great Again (MAWCGA). If you believe the intellectual gratin and shekel dispensers in D.C. will internalize that notion, perhaps you would be interested in some prime real estate – something deep in the Everglades.

The Federal Reserve loves low interest rates.  With rates stuck at low levels since the 2008 financial crisis, they have become the rule rather than the exception.

When the coronavirus pandemic plunged the economy into a sudden freeze, the Fed lowered its benchmark borrowing rate to near zero and purchased corporate and government securities like there is no tomorrow to curb unemployment and to stimulate the economy.

The funds rate defines the cost of lending from bank to bank through the Fed and serves as the benchmark interest rate for the economy. While low interest rates may be great for driving up sales of homes and automobiles, artificially low interest rates punish savers.  Money market and certificate of deposit rates head to near zero when the Fed sets the federal funds rate at near zero.

This action disproportionately hurts senior citizens, retirees, savers, and those folks who prefer less risk.  In accepting the lower yield, those people get less income, less ability to consume, a lower quality of life, and take on more risk in the stock market for which they are not prepared. Nasty choices.

Low interest rates force savers to pursue more risky investments in the hunt for yield.  Ten-year Treasury Bonds offer a laughable less than 1 percent, making stocks look attractive.  Thank the Fed for the stock market’s run.  The rise in stocks benefits the wealthiest 1 percent or 10 percent or wherever you want to draw the line, who own more than $11 trillion of stock and mutual fund shares.

The Fed’s fundamental imperative is to strong- arm ordinary Americans to spend, spend, spend, or to invest.  The notion being that if, for example, a saving account provides an interest rate that rounds to zero percent, savings makes no sense – especially when inflation is rising faster than the interest earned on a savings account.  Low-risk investments don’t keep up with inflation and your money doesn’t have as much purchasing power.

The situation for savers isn’t likely to get better soon.  The Fed chair has said rates would remain near zero at least through 2023, though the Fed insists it won’t take interest rates negative. The reality is that when inflation is factored in people are already experiencing negative interest rates.

When more people spend and invest the economy expands. Of course, every dollar consumers spend instead of saving amounts to several dollars that would have been available in the future if it had instead been earning interest. As low rates discourage people from saving, they must become more and more reliant on government entitlements in old age.

To put the worst construction on it, a policy of constant low interest rates is an idea that deserves to be put on a stretcher and carried back to the leisure of the theory class where it was born.  You don’t have to be Philip Marlowe to know these policymakers have more than they can say grace over and are permanently out of the financial wars.

Low interest rates add to the Illiad of woes faced by ordinary Americans. The working class was in chronic crisis, alliteration aside, even before the pandemic. They work hard to make ends meet and stay out of the grasp of poverty, play by the rules, and do everything asked of them but kick extra points.

What is the right interest rate? Here’s a crazy idea: the free-market interest rate.  Cut out the middleman.  This is the rate you get when the Fed does not interfere in financial markets.

Don’t bet on it; the Fed wants to preserve the status quo, preserve in other words, the wealth of the One Percent and all that.

But not to worry, money isn’t everything – as long as you have enough of it.