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Economics question...

Could someone please explain to me why, if prices on everything go up due to inflation and people are having trouble affording the things they need, why does the gov't raise the interest rates and tell us it is to help curb inflation? Seems to me by raising the interest rates, they are adding to the list of things we can't afford.

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Livingwell · 61-69, M

I just read a pretty detailed article on this. It seems the fed implemented a new policy in 2020 and completely missed the effects of the faster than anticipated recovery from Covid, increased demand from transportation shortages, pay increases, and strong job market. Stimulus exaggerated the effects of inflation. And then the fed was reactive instead of looking ahead. Jerome Powell will go down as one of the biggest failures as fed reserve chair for his monetary policies.

whowasthatmaskedman · 70-79, M

@Livingwell Not that I see a conspiracy here.. But since economists like Joseph Stiglitz have been reading most of these factors into their predictions as hypotheticals, how come the smartest minds in the Fed didnt see it? A failure like this leaves the currency open for manipulation that only widens the gap between the haves and have nots..😷