Interest rates

What forces a country like Canada or US to raise interest rates and put a stop to the insanity of debt fueled inflation?

Official response from submitted

Careful here: raising interest rates is a policy aimed in the current situation to prevent or forestall an inflation, one which has not yet materialized despite the last 8 years of dire warnings that it would. Given the failure of the Federal Reserve to foresee, forestall, or effectively to minimize the capitalist crash of 2008, it seems quite reasonable to be skeptical of how effective the Fed might be in the face of an inflation if the massive amounts of money injected into the global economy since 2008 were to turn toward buying goods and thereby drive up prices (inflation). Anxious people therefore want to get the jump on the problem by raising interest rates in advance of the inflation breaking out. The problem with that lan is that raising interest rates has immediate negative effects on demands for goods and services for everything (e.g. homes, cars, credit card purchases) whose costs are raised when interest rates rise. In short, capitalism's contradictions and the resulting problems for economic policy have pushed us into very bad economic straits with very problematical policy options....hence the hesitancy, gridlock, etc viewed in DC.

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