They tried to explain how the FED uses interest rates to fight inflation - without talking about loans. The idea is that higher rates means less loans, less loans means less money running around to buy things and prices go down.
The downside is that a highly indebted economy cannot replace old (cheap) loans with new ones (too expensive). Both business and consumer suffer and the deceleration of the inflation occurs first slowly, then suddenly - too suddenly. But let me guess how the FED plans to solve this: by printing even more money.
They tried to explain how the FED uses interest rates to fight inflation - without talking about loans. The idea is that higher rates means less loans, less loans means less money running around to buy things and prices go down.
The downside is that a highly indebted economy cannot replace old (cheap) loans with new ones (too expensive). Both business and consumer suffer and the deceleration of the inflation occurs first slowly, then suddenly - too suddenly. But let me guess how the FED plans to solve this: by printing even more money.
(post is archived)