How Rising Interest Rates “Control” Inflation #Shorts
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LEARN ABOUT: Investing During Inflation
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HOW TO INVEST IN SILVER: Silver IRA Investing
Inflation is a general increase in the prices of goods and services in an economy over time. It is one of the most important factors that affect the overall health of an economy. While some inflation is considered healthy, high or unstable inflation can hurt the economy. It reduces the purchasing power of people and can cause instability in the financial market. Therefore, central banks around the world keep a close eye on inflation rates and take corrective measures to keep it in check. One of the most important tools at their disposal is raising interest rates.
When central banks raise interest rates, they aim to reduce the amount of money in circulation, thus reducing the demand for goods and services. This results in lower prices for consumer goods and services, which helps to slow down inflation. Higher interest rates make it more expensive for businesses and individuals to borrow money, which means they are less likely to do so. This decreases the overall demand for goods and services, which helps to control inflation.
Additionally, higher interest rates can also increase the value of the domestic currency, reducing the cost of imports and increasing the competitiveness of domestic products. This also helps to slow down inflation by reducing the cost of production and distribution of goods and services.
Central banks have various tools to control inflation, but raising interest rates is the most common and effective one. Central banks will typically raise interest rates in response to high inflation rates as a way to cool down the economy. It is important to note that rising interest rates can also have negative effects on the economy. Higher interest rates can lead to a slowdown in economic growth and higher unemployment, which can cause social and political instability.
In conclusion, rising interest rates are an essential tool for central banks to control inflation. They help to reduce the demand for goods and services, which leads to lower prices and less inflation. However, rising interest rates can also have negative effects on the economy, so central banks must be careful in how they use this tool. It must be done in a way that balances inflation with economic growth and stability.
It would help if the minmume wage and wages in general were tied to inflation
This fool forgot to mention that every time the feds have fought inflation with raising interest rates it has come with serious consequences for the economy and job employment. History tells us that job unemployment will hit major highs. On top of global wars and banking collapse as the cherry to go on top of that. Good job Biden and Feds!!!!
This concept is a capitalism shame. The rich is greedy prices will never go down for essential items. Now the middle class will take the brunt of the hit.. can’t afford anything because of inflation & can’t use credit because of high interest. The old saying we are destined “the rich will get richer & the poor will get poorer” middle class is on its way to extinction.
How about businesses just saying fuck it quit and now a depression
If you can never burrow money
Sucks for your holdings though
both of them look up when talking… so who is taller than who?
Or we could just stop printing money and handing it out for free.
If people go into bankruptcy, then it all makes sense.
A lot of it is BS, just look at food. they say "supply and demand" while they jack the prices sky high and then it sits on the shelf and nobody buys it. as an example apple cider was $4 a gallon last year and people bought a ton of it over the fall season, this year it was $7 a gallon and NOBODY bought it, it sat on the shelf gathering dust until it expired.
Thanks – this helped me to understand 🙂
Who’s gonna stop eating to stop inflation?
Where's Dustin Sternmeyer when you need him
Hmm, In theory yeah but no.
Yeah, but that mean the middle class will be the most stressful during the changes
You forgot "Supposedly" as in it supposedly will bring down prices. There is no guarantee this will work.
that would only deter the rate of inflation and not the prices of items, other than gas these prices aren’t going down
Man I can't wait for the great depressions return
I thought it also had to do with banks borrowing money from the central bank; not just storing money in the central bank.
Higher rates for Chase to borrow from Fed = higher rates for consumers to borrow from Chase.
Not sure if you realise but gas and groceries aren't exactly something we can slow down on with our rate of spending.
How long does it take for a train traveling at full-speed to come to complete stop after the brakes have been engaged? ….regardless of the answer, it just seems like we're being pushed onto the tracks by an unmarked vehicle driven by unidentified government officials
You are the best!
That doesn't fix the issue your still poorer
If we were living in the confederacy, we would have 9000% inflation