Quote:
Originally Posted by eastwest2300
we gotta hold on for the wold ride ahead.  |
It’s really not a hard concept:
Yes, raising rates will slow down the economy and would lower inflation in a “normal” market. However, raising rates in an environment plagued by supply chain issues will:
1. Increase the cost of production so production itself will decrease
2. Decrease spending by consumers in a rate-rising and production-reducing environment, so production will be even less (why produce when no one is buying and also cost more to produce)
Since supply is the biggest driver with the current inflation crisis, less supply means inflation will stay and increasing rates will mean less spending. Basically taking out supply AND demand
