The Fed has options for countering the record inflation the U.S. is facing that are more productive and less risky than raising interest rates.
The Federal Reserve is caught between a rock and a hard place. Inflation grew by 6.8% in November, the fastest in 40 years, a trend the Fed has now acknowledged is not “transitory.” The conventional theory is that inflation is due to too much money chasing too few goods, so the Fed is under heavy pressure to “tighten” or shrink the money supply. Its conventional tools for this purpose are to reduce asset purchases and raise interest rates. But corporate debt has risen by $1.3 trillion just since early 2020; so if the Fed raises rates, a massive wave of defaults is likely to result. According to financial advisor Graham Summers in an article titled “The Fed Is About to Start Playing with Matches Next to a $30 Trillion Debt Bomb,” the stock market could collapse by as much as 50%.
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Rather Than Sink Main Street by Raising Interest Rates, the Fed Could Save It. Here’s How.
Inflation is plaguing consumer markets, putting pressure on the Federal Reserve to raise interest rates to tighten the money supply. But as Rex Nutting writes in a MarketWatch column titled “Why Interest Rates Aren’t Really the Right Tool to Control Inflation”:
Continue reading →Filed under: Ellen Brown Articles/Commentary | Tagged: Bank of North Dakota, economy, Ellen Brown, Fed, FED REFORM, Federal Reserve, FEDERAL RESERVE ACT, Great Reset, IMF, Inflation, interest rates, WEF | 18 Comments »