Increase worker power permanently solves the wage price spiral.

An even more intriguing possibility is that the job guarantee would eliminate the need for the Fed to adjust interest rates.

Here’s how that would work: Currently, Fed officials operate on the assumption that some amount of unemployment is necessary to control inflation. As workers’ bargaining power rises, an arms race sets in across businesses. Workers claim more revenue as compensation, capitalists try to preserve their cut by raising prices, then workers demand higher wages for the increased cost of living. Wash, rinse, repeat. The result is the wage-price spiral, delivering higher inflation.

The Fed intervenes by raising interest rates, which squeezes the supply of credit and forces companies to stop expanding or to downscale. This stops the arms race by destroying jobs. But, once again, it’s left up to the capitalists to decide just whose jobs are to be destroyed first.

There’s a burn-the-village-to-save-it quality to this practice, since allowing inflation to continue also destroys jobs as price signals go haywire. But again, with a job guarantee, the downturn would simply move workers onto the set wage and compensation rate, which doesn’t engage in a bidding war. This would end the arms race as well, but without casting people into joblessness and all its attendant human destruction. So the job guarantee could stabilize the ups and downs of inflation as well. (This would be complicated if the job guarantee’s wage was indexed to rise with inflation, though not indexing the wage would force regular legislative fights to raise it instead.)