3 ms·
Can I hijack this thread to ask a ‘dumb’ question: If the point of high interest rates is to take money out of the economy, would it not be more effective and f
by bigfudge 3y ago
Can I hijack this thread to ask a ‘dumb’ question: If the point of high interest rates is to take money out of the economy, would it not be more effective and fairer to simply raise taxes and pay down debt or avoid taking on more debt in the current year? I can see this wouldn’t encourage saving, but the taxes could be targeted on things which are supply constrained…
- marcod 3y agoIn my mind this is the old “If the only tool you have is a hammer, you tend to see every problem as a nail.” They can raise or decrease the interest rates as its governing body sees fit. To raise taxes or pay debt requires approval from the Legislature and that seems hard to come by.
- qeternity 3y agoBecause the money supply needs to be adjusted to a much larger degree than taxes will allow for. Additionally there is actually a shortage of USD collateral in financial markets, further reduction of which would have significant consequences. Rock, meet hard place.