one month of 6 percent inflation and the squishes are tucking tailpic.twitter.com/Hv0LqwSNPd
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from what I can tell it's a) a huge shift in spending from services to goods b) brittle supply chains can't keep up and c) people spending down their pandemic rescue bucks. raising rates wouldn't do anything about the first two!
Yes now is the time to keep inflation going at a reasonable clip to get investments in productivity, supply chain, and shipping. We aren't trying to crush a bubble or a wage spiral but a push for real investment.
Raising rates is not the fix. Current inflation is a result of logistical failures in the private sector & the strangulation of public infrastructure since the Reagan admin. Increase the min wage to help low end wage earners & increase taxes on the top end to fund gov.
B I N G O
Yes, higher rates reduce borrowing, which reduces demand for goods, which improves the supply chain and reduces prices.
The actual effect chain is higher rates reduces investment which throws people out of work which reduces demand which reduces prices. Reduced demand for goods doesn't "improve" the supply chain. More ships, containers, container chassis, drivers... improves the supply chain.
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