Currency markets are sending ominous signals about global growth and inflation. Big moves in the value of the U.S. dollar have rung alarm bells for investors, as Europe and the U.S. remain out of sync in addressing inflation, and China’s economy begins to falter.
"Sudden" inflation is due to a sudden cut in supply... demand remains the same.
"You" (the Fed) raise rates to effect higher prices to kill demand, right? So, the use of rates is an effort to reduce demand to better match supply (Shouldn't we be trying to raise supply?). So, raise rates and you get more "shrinking" of already shrinking supply. Prices keep going up, people buy less, business shrinks, producers cut production, people lose jobs. A whole new "cycle" will begin, "down." It's as if the Fed has waited for a naturally occurring "downturn" to begin influencing a turn "down."
Instead of killing demand, shouldn't "we" be trying to encourage, influence, create, spur supply? Is killing demand the only way? So, for all who will lose jobs as the Fed raises rates--maybe look into learning to trade.
Is it me or is this a bad time to raise rates?
It all just keeps going around and around, doesn't it??