This afternoon, the Federal Reserve will announce what it's doing about interest rates. It's the Fed's last chance to change course this year. And it's their first chance in a while to do something without appearing to interfere with a looming presidential election. So observers widely expect the Fed to hike interest rates.

I've written plenty on why I think that would be a bad call.

That said, the jump will almost certainly be just 0.25 percentage points. On top of the 0.25 percentage point hike last December, that's a rate of increase of just 0.5 percentage points over two years. Which is unlikely to have major effects on the economy.

So if the Fed goes through with a hike today, it certainly won't be a catastrophe. The problem is the bigger picture.

The Fed's role is to strike a balance between maximizing employment and controlling inflation. The trouble is, as the job market improves, the overall dynamic in the economy flips: Instead of workers competing for scarce jobs, employers are competing for scarce workers. Employees thus gain a lot more leverage to demand pay and benefit increases. But business owners and shareholders still want their profit margins, and have to fight harder to prevent rising wages from pushing profits to zero. The obvious way to do this is by jacking up prices.

If this arms race between workers and owners spreads across the entire economy, prices everywhere rise — thus, inflation.

This is where the Fed steps in. The way it "cools off" the economy is by raising interest rates: It makes credit harder to come by, which encourages businesses to either scale back or delay growing. Practically speaking, that means people losing their jobs, or not being able to find jobs when they need them.

It's up to individual businesses to decide how they respond to the credit squeeze. And it's not like they start by cutting upper management's pay. Instead, the first people to lose their jobs, and the ones most likely to be denied jobs to begin with, are the people with the least power. That means people with less education, or people with chronic disabilities or health problems, or workers who have suffered spells of unemployment before. It means the young and people with felony convictions in their past. It means racial minorities and female service workers.

These are the Americans we throw under the bus whenever we decide that inflation needs to be tamped down.

It gets worse. Mainstream economics has concluded that the way to keep inflation under control long-term is to not let the unemployment rate fall below a certain threshold. The 4.6 percent unemployment we're at now is already low compared to the 5-to-6 percent range the Fed has historically targeted. That's why Fed officials are itching to hike interest rates.

Think about that! It's the explicit purpose of American monetary policy to force joblessness on people who would otherwise work — to maintain a pool of unemployed Americans by brute policy decree, when the unemployment rate could go lower.

Again, the people most likely to fall into that pool are the most vulnerable and marginalized groups of Americans. And even for workers who find jobs, but who are close to falling into that pool, the constant precarity of their employment means they have no leverage to demand a better deal. This is a big part of why millions of workers have to put up with terrible pay, and why millions get stuck working part-time when they want full-time work. It's why wage theft, abuse, exploitation, and discrimination are rife in American employment. And it's a big part of why black Americans continue to suffer an unemployment rate that's perpetually twice as high as white Americans'.

So yes, today's rate hike will likely be tiny. But even so, it will belie the insane logic of Fed policy.

We can do better.

One alternative to raising interest rates is simple tax increases. Opponents complain that higher tax rates damage growth. But when you're trying to cool off an overheated economy, damaging growth is the point! Unlike interest rate hikes, we can tailor tax hikes to concentrate their damage on the richest Americans, rather than on the poorest. Instead of fewer tax brackets, we should have more. That way, when inflation needs to be squashed, we could hike tax rates in the richest brackets first, and only hike in the lower brackets when the higher ones are maxed out. When the economy needs a boost, increase government aid to the poor and working class and cut the rates in the poorest brackets first.

Another alternative is what's called a job guarantee: a federal offer of paid work with benefits to anyone who will take it. Between infrastructure revitalization, child care, assisting the elderly, environmental cleanup, ecological conservation, and more, there's plenty to be done. Because pay in the job guarantee would be fixed, it wouldn't contribute to the arms race between workers and owners over private sector revenue. As the economy cools off, more people would enter the job guarantee, allowing the arms race to calm down. Then, as the economy and private sector wages recover, more people would leave the job guarantee for greener pastures.

Both of these ideas are, obviously, pretty radical. But that highlights the problem: The operating assumptions under American macroeconomic policy are appalling, but the Fed doesn't have much choice. It's limited by the toolkit Congress gave it. The only way to break out is to enact big changes, and fundamentally reform our entire approach to jobs and inflation.