The Federal Reserve raised interest rates by three-quarters of a percentage point in order to battle inflation, even as the economy has begun to slow. This follows a quarter-point move in March, another half a point in May, and three-quarters of a point in June. The Fed also signaled in its post-meeting statement that more rate increases are to come, probably in September, saying that it “anticipates that ongoing increases in the target range will be appropriate.”

This is bonkers, friends. The Fed is trying to douse a fire in the living room when the forest is ablaze. Inflation has broken out all over the world. It’s happened because of pent-up demand from more than two years of pandemic. And limited supplies of everything from computer chips to wheat, due to difficulties in getting the world economy up and running, along with Putin’s war in Ukraine driving up world energy and food prices, and China’s lockdowns against COVID-19.

Big corporations, meanwhile, are raising prices because they can. Consumers have little choice due to record levels of corporate concentration, and the rising costs of supplies has given corporations perfect cover.

The Fed’s firehose is hitting none of this.

Meanwhile, apologists for large corporations and the Fed say the labor market is in fine shape. Rubbish. There are two aspects to the labor market — jobs and wages. Jobs have increased but hourly wages have plummeted in real terms (adjusted for inflation). So-called “wage increases” haven’t come near to making up for all the price increases. There’s no hint of the old “wage-price inflation” that’s talked about in macroeconomic textbooks.

If the Fed keeps it up — even if the national economy avoids an official “recession” — most workers will fall even further behind.

The living standards of nearly everyone who borrows money (that is, everyone except the super-rich, who can borrow at rock-bottom rates because they use their fortunes as collateral) are already dropping. The average rate on credit card debt has reached 17.25% (up from 16.34% in March, before the Fed began its rate increases). Rates on student loans, car loans, and mortgages are also up from last year.

Inflation is a problem — but we can tackle it far better, and without imposing such a humongous burden on the bottom 80% of Americans by income. We should do it with a temporary windfall profits tax on oil and food companies, temporary price controls on pharmaceuticals, bolder antitrust enforcement, a tax on stock buybacks, and higher taxes on the wealthy.

Robert Reich, former U.S. Secretary of Labor, is professor of public policy at the University of California at Berkeley.