Inflation, Fed rates and Recession
I don't Want repeat what is said again and again but just want to know why Fed is using rates to control inflation if rates are not the root cause of issue. Post covid demand, supply issues, war are the root causes for spike in prices. Wrong medicine for a real problem. Post pandemic, customers ability to spend more has increased, so no matteryou increase the rates they will still throw the money to get what they want, exception a little change. not sure how they derive and rely on CPI prices as a measure of inflation but I feel is nt more reliable to use CPI vs Salary increases as a measure? People are earning more, people have accumulated more during lock downs so they have funds to splash but supply is clogged with various reasons. Definitely NOT rates that caused this mess. If it is rates, then it should have happened in 2021 itself.
Pressing a wrong button and inducing recession, fed is creating an artificial crisis.
If you can't solve a problem, don't create anotherproblem. $SPDR S&P 500 ETF Trust(SPY)$
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I think there are no better alternative. Rate hikes are thought to reduce spending through borrowing and encourage saving with high interest. But risk is that it might disrupt businesses leading to recession or stagflation. This is just very general theory. In the real world, if the people can afford they will spend. Just that there will be a tipping point where price increase has to slow down. I am just a novice but I think experts cannot be absolutely sure as well.