Oh my goodness the conventional wisdom says that in order to fight inflation the central banks must raise interest rates to cool the economy down. I, part of the unwashed says that raising the interest rates has just the opposite effect. Raising the federal rate causes companies to borrow at a higher rate, forcing said companies to raise their prices, causing inflation to rise.. Oh my if the price of goods rises, guess what, you have inflation. Oh there’s always the possibility though slim as I think it is that people will slow down there unnecessarily spending, which may even force many of those businesses to go out of business, or at the very least lay off many of their workers..
The fewer the businesses and or the fewer the workers to produce goods the higher the inflation because there will always be a demand for certain goods such as groceries, clothing and housing. Let’s assume that the consumers percentage of wages goes toward housing, clothing and food goes up, two things are going to change, savings will go down and or unnecessary purchases such as travel and cable purchases will decrease.
*There is going to be food inflation because of the Russian Ukraine war, Raising interest rates will make things worse.
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