Reply to Armchair economists, can you cut rate with rising prices?

Forum Index » Money and Finances

Reply to "Armchair economists, can you cut rate with rising prices?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous]You can, but, ceteris paribus, it will increase inflationary pressures.[/quote]

+1  Too bad Trump and the Republican Congress leaders don't understand that.  An excerpt from a recent newsletter from Nobel prize winning economist Paul Krugman.)

Understanding Interest Rate Policy
When rates should rise or fall

[quote]

Last week Mike Johnson, the speaker of the House, said something stupid. OK, that has been true every week of Johnson’s tenure. But this particular remark was right up this newsletter’s alley and suggested the topic for this week’s primer.

Here’s what happened: Johnson went on TV and supported Donald Trump’s demand that the Federal Reserve cut interest rates. Why should the Fed cut? Because, said Johnson — echoing Trump — “the American economy is hot.”

That sound you hear is thousands of economists slamming their heads on their desks. Interest rate cuts aren’t supposed to be a gold star the teacher gives you when you did well on a quiz. Interest rates are a tool for managing the economy — and a hot economy is a reason to raise rates, not cut them.

But I’m not sure how many people, even among those generally well-informed about public affairs, understand why economists say that. And I’m sure that relatively few people who aren’t economists know either how events and ideas led to the current consensus about interest rate policy or why there are real arguments among serious, non-MAGA people about the Fed’s next move.
[/quote][/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics