How the Fed Is Quietly Inflating the AI Bubble While Hiking Your Electric Bill

The piece argues that the Federal Reserve’s one-size-fits-all interest-rate policy is simultaneously inflating asset bubbles (including AI speculation) and raising everyday consumer costs. By prioritizing keeping asset prices high, the Fed hovers between hiking rates to suppress wages and pausing cuts to avoid market pain - exemplified by a profile of Fed hawk Beth Hammack, a former Goldman veteran. Higher benchmark rates feed through to real-world costs: utilities like Con Edison, Otter Tail and Oncor are asking regulators to raise consumer bills because bond yields and borrowing costs rose; municipal borrowing pushes up property taxes; farm equipment, working capital, mortgages, auto loans and credit-card rates all climb. In these sectors, higher interest rates increase consumer prices rather than lower them.

The policy’s inflation-fighting mechanism is not gentle demand management but a deliberate creation of a private credit shock - bankruptcies, unemployment and collapsing balance sheets - to force prices down, a costly “destroy that village to save it” strategy. Historically the U.S. used segmented credit controls (thrifts, commercial banks, regulated rates) to direct capital; deregulation moved policy to an undifferentiated Fed rate that privileges capital holders via Cantillon effects. Restoring targeted interest-rate rules or rebuilding sectoral regulation would blunt pass-through costs, but doing so requires a major political reallocation of regulatory power.