Is increasing the interest rates the best way to cure inflation in a time of Shortages?

There's not enough:
Workers
Gas
Housing
Food
Water
So naturally the prices rise. It's supply and demand. Increase interest rates will just mean there's not enough money too. It's not like we're doing this for fun. It's the basics that are missing. Covid, the war, inadequate planning, lower birth rates/aging population, a lack of housing, greed, poor maintenance, weather/climate issues are all contributing to this.

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Northwest · M

Increase interest rates will just mean there's not enough money too.

That's the idea. Unfortunately, this is not going to affect the wealthy. Only the lower income folks, who got a taste of the goof life, will no longer have enough buying power. That's how an open market economy deals with "issues". A short-term recession is coming next.

whowasthatmaskedman · 70-79, M

Its the only tool the Fed has, other than printing money.. And thats how everyone got into this mess.😷

Tastyfrzz · 61-69, M

@whowasthatmaskedman seems to me that it's an unwillingness to face the reality that the wealthy should have been taxed more in order to shore up infrastructure and education. Now we're in a mess. It's like a plane that's going into the future but there's not enough seats. It's not just a lack of window seats in first class. Plus there are storm clouds of plague, famine, war, ... Bearing down on the airport so it's going to leave soon and not everyone is going to be on it. That's just the way it is.

whowasthatmaskedman · 70-79, M

@Tastyfrzz Sadly I cant argue with a word of that.. But to add that the people at the front of the plane think they will be OK because its first class. 😷

Tastyfrzz · 61-69, M

@whowasthatmaskedman They might find that when they land they will be invited for lunch but they will be the only thing on the menu.

PicturesOfABetterTomorrow · 41-45, M

The entire economic model is bullshit and this is just yet another example of why it is a failed experiment. Most have given up on even pretending they have a solution.

ViciDraco · 36-40, M

Low unemployment is actually a significant driver of inflation. In nations like the US there is plenty of food. We're constantly throwing it away and wasting it. The reason there is a gas shortage is because oil producers have become more cautious about increasing production after covid lockdowns temporarily caused oil to go negative.

Pretty much most of the problems we have are currently caused by purposeful profiteering and/or needless wastefulness.

Interest rate hikes are meant to slow the pace of loans and credit which tightens the money supply and helps keep inflation down. Honestly it's probably far too late. Interest rate hikes like this should have been matching the shrinking of unemployment during both Obama and Trump terms.

PTCdresser57 · 61-69, M

Well said...if only more ppl understood economics

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