Inflation is a general increase in prices. The most common reason why prices increase is scarcity.

The current inflation was caused by COVID-related scarcities of oil, food, shipping, computer chips, metals, lumber, labor, and other commodities.

The cure for this inflation is to cure the scarcities that caused the inflation, oil and food being the most important.

The Federal Reserve wrongly believes inflation is caused by too-low interest rates and can be cured by raising them. However, interest is a business cost—a cost for manufacturers, sellers, and buyers.

It should be obvious that raising manufacturing, selling, and buying costs will not cure inflation.

All interest rate increases do is raise costs, slow the economy, and eventually cause a recession.

We repeatedly have written that raising costs via interest rate increases is a terrible way to lower prices. 

If excessive federal deficit spending causes inflation how do you explain this graph?

The fight against inflation: To succeed, the Fed must fail

Inflation: Why the Fed is confused

Truly pitiful: Federal false helplessness in the face of inflation

Do interest rate increases fight inflation?

Why interest rate increases don’t cure inflation.

Let’s be clear. Raising the cost of manufacturing, shipping, and consuming does not lower inflation prices.

What next, Fed, applying leeches to cure anemia?

 

Rodger Malcolm Mitchell

Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.

(Ever wonder why federal spending cuts demanded by debt nuts are designed to widen the income/wealth/power Gap between the rich and the rest, while the few federal spending increases they want are designed to reward and protect the rich?)