tramsey Loc: Texas

I took one course in Economics in college because that's all that was left and I needed it to fill out my credits. I didn't understand what he was talking about right from the first day and it didn't get any better.
So here's my problem. The Federal Reserve just increased interest rate by .75% with the good news that another increase would be coming later in the summer. This is all done to ward off recession.(I think it's already here) So the interest rate will increase the rate on credit cards, car purchases, housing and everything else and they say our pay check will be less to. I'm not sure about that but it certainly won't go as far.
Finally to the point. If all these things are going to cost us more how will that help to ward off recession? Please don't be a college professor and explain it to me in six syllable words. Just single syllable layman's grunts will do just fine.,
My wife has several health issues so I will be away from the computer fot the next several hours Thanks

DWU2 Loc: Phoenix Arizona area

It's not going to ward off recession - it may cause a recession. They're trying to reduce demand for goods and services, and in so doing, reduce the rate of inflation.

robertjerl Loc: Corona, California

It is to ward off inflation by making it more expensive to use credit. If fewer people are willing to use credit to buy things then the upward pressure on prices due to supply and demand will be reduced. They hope that may put the brakes on a recession. But as long as the supply is restricted the prices will still probably go up. And there is the government spending money they don't have by just printing more (it is all numbers in a computer but they still call it "printing") and that will still drive prices up if supply is not increased.

We have a long history, since the Depression, of being used to the government running a deficit to pay for things they didn't pay for before. The Federal government needs to cut back to only the major necessary things the Constitution says they are responsible for and leave the rest up to the states or private entities and the people themselves. That huge debt needs to be paid off (the interest is horrendous) - that will take decades, but it took decades to create it. We will just have to get used to the idea that the government is not the source of all things we want or need. And that will be a hard t***sition for most people to make.

bikinkawboy Loc: north central Missouri

Here’s terms I can understand. The economy is a bicycle speeding down a steep hill with a brick wall at the base. The bicycle is gaining speed all the time and the fed knows that by the time the bike hits the wall, the speed will be so high that the rider (you) will be k**led instantly.

The fed’s method of slowing down the bike (economy) is to shove a big stick in the spokes. After the big crash and burn, you are not dead but you wish you were because you are now so beat up that it even hurts to blink your eyes. It will take years of painful therapy for you to even be able to go to the bathroom on your own again. And you will be alive but so destitute that you will go dumpster diving for used toilet paper because you can’t afford to buy any new toilet paper. That will reduce the demand for TP, and with reduced demand the price goes down for everyone.

And all it took to get the economy back under control was for an ordinary Joe like you to spend five years bedridden and have a million dollar hospital bill h*****g around your neck for the rest of your miserable life.

Now see, that wasn’t so complicated was it? And I’ve never even studied economics! Have a nice future!

MrBossHK Loc: The West Valley of Phoenix metro area

tramsey Loc: Texas

Now I understand. Either way it's not going to be a fun ride - Thanks for the come back

tramsey Loc: Texas

I watch those gold commericals that tell me the country is in the tank. lThey show the debit growing by numbers going fast you don't even see them. I think I will just keep on doing what I've been doing, look the other way and cough. Thanks for making things so clear

tramsey Loc: Texas

I understand now. If you make the price of gas ten dollars a gallon that will make people buy less gas and the price will go down. Gotcha - Thanks

mr spock Loc: Fairfield CT

Aren't you sorry you asked?

DWU2 Loc: Phoenix Arizona area

It's more like, if you make the cost of borrowing money to buy a house so high, people won't buy one, and won't subsequently buy all the stuff that goes with it, like refrigerators, linens, insurance, home repairs, paint, legal services, etc. Then, those companies lay off staff, and the hot air starts to go out of the economy - hopefully not too fast!

BArthur3

The Fed is trying to walk the proverbial tight rope between inflation control and recession avoidance. There is one significant economic school of thought that inflation cannot be brought under control without a recession. Only time will tell but right now the worldwide stock markets are "suggesting" a recession (meaning significantly reduction in corporate earnings) is a high probability.

bikinkawboy Loc: north central Missouri

The other morning on the National news they were saying the fed is trying to make it a mild recession rather than a big recession. Sounds like we’re in that boat at the very edge of a waterfall that’s just starting to tilt.

kvanhook Loc: Oriental, NC

The Devil will be wearing an overcoat before the government controls their spending.

Jazztrader

To understand the Fed, is to understand that it is actually a group of private bankers that organized on their own and have only their own interests in mind. This book reads like a novel, but it is factually correct in its content. There are lots of used copies around and most larger public library systems will have copies of it. I urge you and everyone to read it and weep about what the Fed actually is and what it stands for :
https://www.hustleescape.com/book-summary-creature-from-jekyll-island-by-edward-griffin/

cedymock Loc: Irmo, South Carolina

They want people to stop buying stuff so demand for stuff will go down and slow down inflation.