or be charged recklessly higher prices by capitalists because they just don’t have the extra cash to pay higher prices
This must be the answer to the question I was asking another commenter. They have to lower prices because people won’t have the cash. I honestly thought people didn’t already have the cash though.
They have to lower prices because people won’t have the cash.
The Fed doesn’t want deflation either, i.e. for prices to decrease rather than increase. Deflation could also set off a bad spiral: why by a toaster today for $30, when you’re confident it will be $25 in a week, or $20 in another week? When people generally expect prices to go down, they refrain from buying things, which forces sellers to offer even lower prices, etc.
So the Fed aims for 2% inflation, where prices will increase each year but only relatively slowly.
They dont. Lots of people are struggling with higher prices. Mostly, the price rises are due to other events, like the war, like the tariffs. Putting the rates up doesn’t help that as much as when the economy is overheating, from going ‘too well’. However, they don’t have many levers to pull and interest rates is one big crude one.
They want more people to be struggling, more people to forego buying things and that makes some people even lose their jobs. They then spend even less. However, it does cause companies to reduce prices to compete, or go bust from lack of sales.
Higher interest rates affect Americans less than in other countries where their mortgages are actually linked to the rate. Americans mortgages tend to be fixed for the term. So when rates go up, people have less money, as well as businesses.
This must be the answer to the question I was asking another commenter. They have to lower prices because people won’t have the cash. I honestly thought people didn’t already have the cash though.
The Fed doesn’t want deflation either, i.e. for prices to decrease rather than increase. Deflation could also set off a bad spiral: why by a toaster today for $30, when you’re confident it will be $25 in a week, or $20 in another week? When people generally expect prices to go down, they refrain from buying things, which forces sellers to offer even lower prices, etc.
So the Fed aims for 2% inflation, where prices will increase each year but only relatively slowly.
They dont. Lots of people are struggling with higher prices. Mostly, the price rises are due to other events, like the war, like the tariffs. Putting the rates up doesn’t help that as much as when the economy is overheating, from going ‘too well’. However, they don’t have many levers to pull and interest rates is one big crude one.
They want more people to be struggling, more people to forego buying things and that makes some people even lose their jobs. They then spend even less. However, it does cause companies to reduce prices to compete, or go bust from lack of sales.
Higher interest rates affect Americans less than in other countries where their mortgages are actually linked to the rate. Americans mortgages tend to be fixed for the term. So when rates go up, people have less money, as well as businesses.