alt Hacker NewsPerhaps, we are mixing 2 things:
1) Economic/Monetary Inflation, which is an increase in the money supply in an economy driven by government or central bank ("print money").
2) Price Inflation, which is an increase in the general price level of goods and services that people typically notice at the groceries or gas and usually derives from monetary inflation, but can also be due to the new tariffs.
Is the Fed going to do the same confusion and use 2 to justify higher rates for longer?
I think they shouldn't unless they're being disingenuous and politically motivated (push just enough to make the entire Trump mandate an unending crisis until Democrats get back in power).
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> I think they shouldn't unless they're being disingenuous and politically motivated (push just enough to make the entire Trump mandate an unending crisis until Democrats get back in power).
They've been saying since the Biden administration they are going to keep raising rates. If the Trump regime's choices drive us into an unending crisis, bailing him out with rate cuts would be the politically motivated choice. Continuing to raise rates is just sticking to principles.
According to monetarist theory these two things are one and the same.
The main source of "money printing" is banks making loans. And this is what the Fed targets when it raises interest rates.
I'm not quite sure whether tariffs really do lead to inflation. It depends on how consumers and companies respond to higher prices of imported goods and to the general sense of uncertainty.