Central bankers and leading economic officials from around the world have forcefully aligned themselves behind the declaration of war against the working class delivered by US Fed chair Jerome Powell to the Jackson Hole conclave at the end of last week.

Federal Reserve Chair Jerome Powell, center, takes a coffee break with attendees of the central bank’s annual symposium at Jackson Lake Lodge in Grand Teton National Park Friday, Aug. 26, 2022. in Moran, Wyo. [AP Photo/Amber Barsler]

In a blunt address of just nine minutes, Powell made clear there would be no letup in the Fed’s interest rate hikes, inducing a recession if that proves necessary, to batter down the push by workers for higher wages to compensate for the daily cuts in their living standards resulting from the highest inflation in four decades.

Powell said that as a result of the Fed’s policies there would be slower growth and softer labour market conditions which would “bring some pain to households and businesses.”

It was significant that in his very short address Powell made two references to former Fed chair Paul Volcker, appointed to the position by Democrat president Jimmy Carter in 1979, who imposed record interest rates in the 1980s as part of the war conducted against the working class under the Reagan administration.

Volcker’s measures produced economic devastation in the US as whole sections of industry were shut down and unemployment rose to its highest levels since the Great Depression of the 1930s, leaving effects still being felt today. It also produced similar conditions internationally, particularly in Latin America, as other governments joined the offensive.

Four decades on, the rot and decay of the capitalist economy has developed in leaps and bounds and the representatives of finance capital are prepared to go even further if they consider it necessary.

This was made clear in keenly awaited remarks by Isabel Schnabel, an executive board member of the European Central Bank (ECB) to the conclave on Saturday. She said there was a risk inflation was racing out of control and even greater “sacrifice” would be needed.

“Central banks are likely to face a higher sacrifice ratio compared with the 1980s, even if prices were to respond more strongly to changes in domestic economic conditions, as the globalisation of inflation makes it more difficult for central banks to control prices pressures,” she said.

Schnabel pointed to the key issue exercising the minds of the central bankers and other officials – the need to suppress wage demands, no matter what the cost.