Raising interest rates discourages capital investment which makes it harder to expand. It also makes businesses that float on warehouse credit less able to oper

Raising interest rates discourages capital investment which makes it harder to expand. It also makes businesses that float on warehouse credit less able to operate. Raising the cost of borrowing hurts anyone spending while rewarding those saving. since economic growth happens through increased spending, you can only shrink economic activity by encouraging saving. This makes everyone poorer because there’s simply less money available. Only those with excess capital to save benefit, but they really don’t benefit in an economic sense but in a notional sense. If the issue is supply can’t meet demand, you can either reduce spending or demand and increase savings or you can make capital expansion cheaper and encourage supply meeting demand. The former makes everyone poorer because the economy shrinks. The latter grows the economy, and makes everyone richer. Now I agree inflation is bad for everyone. But inducing a global recession is an ass backwards way to solve it. Expanding supply capacity and ability to deliver while reducing frictional cost of transportation solves it in a positive way. But either way won’t see results over night. It takes time for any of this to happen. But I’ll argue here that inducing a recession and economic downturn by rewarding saving and not spending leaves us at a worse place in 10 years than we would have been had we grown into the demand and rewarded capital expansion in the face of increasing demand. Note, I know there’s a morality in our culture around spending and saving as a concept, but I think these are entirely specious. You should save regardless of the reward structure to provide stability and a buffer against turbulence, and being parsimonious is IMO the actual moral imperative. Saving and spending in the above isn’t necessarily at an individual level but at a societal level. Saving is necessarily contracting economic activity by making capital expensive and removing currency from exchange for goods and services, and creating artificial incentives to save will lead to misery - layoffs, shrinking economic activity, declines in equity markets and the value of real goods relative to savings, etc, all of which is not beneficial to anyone in the long run. Inflation, unless followed on with expansion of currency to try to battle inflation, will resolve itself naturally either way. But letting supply and demand work out the price in the market and making capital cheap means more people and businesses will try to capture more of that extra demand. That’s good isn’t it? Usually markets overshoot so you would ultimately see a period of deflation, especially if a recession pops out, undoing the experienced inflation. But creating a recession to make people spend less and therefore decrease expansion and opportunity for growth is a truly awful strategy.