Post by account_disabled on Feb 22, 2024 4:56:45 GMT
The Federal Reserve is the monetary authority of the United States and is entrusted with controlling and supervising the financial system and executing monetary policy with a double objective: price stability and achieving full employment . Other central banks, such as the European one, only aim to control the rise in prices. However, we are experiencing the highest inflation in the last forty years and, until now, they have taken practically no action. They have launched the dumb arm of monetary policy. The Federal Reserve is going to cause a recession in the United States and the rest of the countries will follow it First they said it was very temporary and when it started to get longer, they did nothing. How is it possible that, having all the power and always being so sure of what they say, they have not avoided this huge price increase? Very easy. Ten mistakes that would prevent current inflation from being stopped Your understanding of inflation is wrong. It is based on false assumptions.
They believe that prices are rising because there is too much money in circulation and, therefore, what needs to be done to stop it is to withdraw money. Something that they are basically supposed to be able to achieve by raising their price, that is, interest rates. Why haven't they uploaded them now? Well, precisely because they know perfectly well, without a Costa Rica WhatsApp Number doubt, that inflation is due to other causes and not those that they have always defended. Specifically, prices are rising due to shortages in the supply of goods after the pandemic, supply problems after the invasion of Ukraine and the great power of large companies that unjustifiably increase their margins. Central banks know perfectly well that, if they raise interest rates, they will not solve these causes of rising prices. The only thing that would be achieved by raising them would be to make investment and consumption on credit more expensive, that is, slowing down sales, employment and economic activity in general: sinking economies.
They know it and that's why they haven't done anything. However. The bad thing is that, if they do nothing, economic subjects will think that, without measures against inflation, inflation will be inevitable. And that will, curiously, actually lead to inflation. What could central banks and the rest of the economic authorities do? Recognize that they are wrong. That they have a wrong idea about inflation and that, at this time, there is no point in raising interest rates because the damage they are going to cause will be worse than the problem they want to fix. What needs to be done is to carry out urgent investments to expand supply, intervene in the energy and raw materials markets where the concentration of capital is increasing margins and causing prices to rise unnecessarily, putting an end to the speculative bubbles that are causing price increases that are passed on to the rest of the economy. Instead, the Federal Reserve, and then the other major central banks will come, has chosen to begin raising interest rates, despite the fact that the studies being done indicate ( here ) that, even if they raised them to the 3% at the end of this year, prices would only drop.
They believe that prices are rising because there is too much money in circulation and, therefore, what needs to be done to stop it is to withdraw money. Something that they are basically supposed to be able to achieve by raising their price, that is, interest rates. Why haven't they uploaded them now? Well, precisely because they know perfectly well, without a Costa Rica WhatsApp Number doubt, that inflation is due to other causes and not those that they have always defended. Specifically, prices are rising due to shortages in the supply of goods after the pandemic, supply problems after the invasion of Ukraine and the great power of large companies that unjustifiably increase their margins. Central banks know perfectly well that, if they raise interest rates, they will not solve these causes of rising prices. The only thing that would be achieved by raising them would be to make investment and consumption on credit more expensive, that is, slowing down sales, employment and economic activity in general: sinking economies.
They know it and that's why they haven't done anything. However. The bad thing is that, if they do nothing, economic subjects will think that, without measures against inflation, inflation will be inevitable. And that will, curiously, actually lead to inflation. What could central banks and the rest of the economic authorities do? Recognize that they are wrong. That they have a wrong idea about inflation and that, at this time, there is no point in raising interest rates because the damage they are going to cause will be worse than the problem they want to fix. What needs to be done is to carry out urgent investments to expand supply, intervene in the energy and raw materials markets where the concentration of capital is increasing margins and causing prices to rise unnecessarily, putting an end to the speculative bubbles that are causing price increases that are passed on to the rest of the economy. Instead, the Federal Reserve, and then the other major central banks will come, has chosen to begin raising interest rates, despite the fact that the studies being done indicate ( here ) that, even if they raised them to the 3% at the end of this year, prices would only drop.