Originally Posted by
panpanpan
So does the fed raise interest rates when inflation starts to get out of control or do they just let it go?
If they raise interest rates, the market crashes and the government can’t service the national debt. If they don’t raise rates, we have more inflation. They are between a rock and a hard place.
Other options include making subtle yet significant changes to the basket of goods and services such that core inflation is unchanged; or change the new inflation target from 2% to 3% or 4% and still claim victory. Another option is to create a new definition of inflation -- something like "baseline" inflation -- and use this made up metric. If all else fails, the Fed can deflect and blame another country or entity for adversely affecting our markets/currency. Or just brrrrrrrrr ...
A5S
(edited)