Fed Interest Rate Increases To Fight Inflation
Hi, I enjoy listening to your insights on the WGN Morning News.
I’m curious, why does the Fed burden workers (the backbone of the economy) by causing them to lose their jobs instead of targeting Wall Street transactions and taxing the ultra wealthy to cool the economy? Are there other, ‘fairer’ ways?
Thanks and Happy Holidays!
Terry Says
The “fairer” way would have been to not enable all the government spending that took place in the past four years since Covid –under both political parties! But given the fears of an economic free-fall, the Fed bought the IOUs used to fund the deficit spending and paid for those purchases with newly created money — liquidity into the system. Too much money combined with a shortage of goods pushes prices higher: inflation!
Tax policy is the realm of Congress, not the Fed. Monetary policy is their only tool! Suck liquidity out and raise rates to create a slowdown, and trounce inflation.
