Former President Obama’s senior adviser David Axelrod on Sunday suggested President Biden drop out of the 2024 presidential race in the wake of a new poll showing the incumbent trailing …
I don't think low rates caused inflation, and I don't think high rates were to lower inflation.
Inflation resulted from supply chain issues and businesses believing (correctly) that they could raise prices beyond their increased costs and rake in additional profit, all while blaming inflation.
High interest rates were to punish labor - to raise unemployment in order to prevent labor from obtaining enough power to demand better pay and better conditions.
It can be all of those things! The pandemic introduced a lot of wildcards into the economy and exacerbated already existant trends. Even financial experts say there's really no way to tell how much each factor contributed to the situation. I agree that supply chain issues is an obvious factor, but because interest rates were so low, people didn't think twice about paying more than they normally would because debt was so much cheaper. We saw this when it came to electronics and home improvement items when people were trapped at home and wanting to go into new hobbies, or get projects done (crypto boom also hurt the GPU situation even more, but suckers continued to pay 2-4k for scalped NVIDIAs anyway).
The fed has gone on record saying they're using unemployment as a metric for when they'll start letting up on the rates, so another checkmark for you on "punishing workers", but they're also tying worker's purchasing power as a direct contibuter to inflation outside of interest rates, which is a debatable opinion depending on what study you look at and I personally disagree with, but that does make it harder to deliniate if it's actively malicious on their part or just passively malicious.
I don't think low rates caused inflation, and I don't think high rates were to lower inflation.
Inflation resulted from supply chain issues and businesses believing (correctly) that they could raise prices beyond their increased costs and rake in additional profit, all while blaming inflation.
High interest rates were to punish labor - to raise unemployment in order to prevent labor from obtaining enough power to demand better pay and better conditions.
It can be all of those things! The pandemic introduced a lot of wildcards into the economy and exacerbated already existant trends. Even financial experts say there's really no way to tell how much each factor contributed to the situation. I agree that supply chain issues is an obvious factor, but because interest rates were so low, people didn't think twice about paying more than they normally would because debt was so much cheaper. We saw this when it came to electronics and home improvement items when people were trapped at home and wanting to go into new hobbies, or get projects done (crypto boom also hurt the GPU situation even more, but suckers continued to pay 2-4k for scalped NVIDIAs anyway).
The fed has gone on record saying they're using unemployment as a metric for when they'll start letting up on the rates, so another checkmark for you on "punishing workers", but they're also tying worker's purchasing power as a direct contibuter to inflation outside of interest rates, which is a debatable opinion depending on what study you look at and I personally disagree with, but that does make it harder to deliniate if it's actively malicious on their part or just passively malicious.