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The primary lever the Fed has to influence inflation is interest rates. Low interest rates tend to increase actual investment, in factories new businesses, etc
by highfreq 14y ago
The primary lever the Fed has to influence inflation is interest rates. Low interest rates tend to increase actual investment, in factories new businesses, etc, and eventually drive inflation up. Increasing interest rates now would most likely trigger a deflationary spiral.
- maaku 14y agoTo further this logic, demurrage allows the effects of inflation but with naturally low interest rates, reducing the probability of a positive-feedback spiral.