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What Did Jerome Powell Just Say About Rates?!
As we’re heading out of the pandemic, you’re probably wondering what I’m wondering: should the economy start improving soon? Well, yes and no… We have some who are not at all worried about inflation, others who are, and many who are worried we’re nose-diving right into another recession.
So let’s see what Jerome Powell had to say about all of this and we’ll decide if he has a point or not.
We’ve already seen signs of the recession, like shipping containers from China being left completely empty on the ports of the U.S. There just aren’t enough goods to fill them. It’s also really expensive to ship them back while they’re empty, so there’s that.
This also is creating a shortage of containers, which is also not great… Of course, they could also lower the demand. Oh wait, that would lead to a recession.
Anyway, what is a recession?
That’s what happens when there’s a sort of “mismatch” between supply and demand. The higher the inflation is, the higher the prices are, which also means the less the demand is. Typically, the Fed lowers prices and prints out more money to stimulate the market.
They could also increase interest rates, which will stop the prices from rising so fast. However, this means that less money will be flowing into the…