What’s Up Next

Inflation is a dirty beast and is the consequence of our government’s actions. The truth is that most large governments have been running deficits continuously since the year 2000 without major consequence until they decided to print tons of money in a single moment in 2020.

In recent months, the Federal Reserve and all Central Banks have hiked rates well above the normal zero they’ve established. Their unconventional actions have brought me to question their logic but I finally see what their intent is.

I have long believed that the Federal Reserve intended to have price stability and I often looked backwards for this stability. A central bank is looking to prevent price changing in the future. So the old price of a home is gone but the new price of the house is here.

The only tool they have is to make things more difficult for consumers. Raising interest rates removes a lot of demand from the market by discouraging investment, subsequently increasing unemployment which reduces buying power. By doing this they remove conditions that would permit growth in demand.

The above graphic - now an NFT, courtesy of Mirror - explains beautifully the task or objective of the Central Bank. Prices rise & Interest Rates follow. Prices don’t fall but simply stabilize.