Inflation is the tool that the Fed was attempting to use to slow down the economy. Q1 and Q2 only look bad because they kept raising rates nonstop. Hell, Q4 of 2021 saw 7% growth.
What exactly do you think raising interest rates contribute to? Yes, prices are going higher, but they're trying to use the tools available to force hiring to slow down because it's impacting the market with increased wages.
> What exactly do you think raising interest rates contribute to?
Not inflation... the whole point of this is to make inflation go down.
If raising interest rates would cause inflation, why did they start after inflation spiked? Why did inflation go back down after they raised rates? Why are they saying everything they're saying?
If inflation slows down the economy, and they want to slow the economy and openly admit that, why are they claiming to fight inflation?
Am I completely misunderstanding your argument? I'm so confused.
They are using interest rates to slow down hiring and increasing wages because of increasing prices. They are essentially trying to make borrowing as hard as possible to increase unemployment. Not everyone is going to quit borrowing. Especially companies who are currently experiencing hypergrowth. But in any event, increasing interest rates are going to increase prices.
In other words, their mechanism for regulating inflation is broken and it's just causing more price increases to occur. Wages have been so stagnant for so long and employees are so incredibly tired of wealth hoarding by the upper class that people are refusing to take jobs for comparative wages that they would have flocked to in 2008.
And I'm all for it. Because prices have outstripped wages for a very long time and we're supposed to just sit here and figure out how to borrow ourselves to death.