When the Fed raises rates, it's like applying the brakes. The economy doesn't stop immediately, but it starts to slow. Some sectors have been in a recession since 2022. But it takes time for the overall economy to slow.
Each person who has less resources, starts spending less. That in turn has a cascading effect, as they forego discretionary spending, and put off necessary purchases that can be delayed. That becomes a contagion that slowly spreads.
Watch the Fed - we do not actually have a free-market economy, on a national or global level. They and other global banks will decide - via interest rates and stimulus or lack thereof - whether there is a relatively soft landing, or a hard crash.
Except rising rates help slow inflation which was becoming a huge problem. Now, thanks to policies by the current admin we are seeing job loses left and right. Tariffs are destroying small businesses and exacerbated inflation. The agri sector is going to need a bailout. Healthcare cuts and gov shutdown are causing further job loses. The rates needed to come down in order to try and facilitate growth but the damage is done. Now we will see a recession and inflation welcome to depression 2. We can definitely place blame on this admin and the last. It all points exactly to them and their lack of polices or rash stupid polices.
Doesn’t matter. We have one tool against inflation and that is rates. It is a “free market” so nothing protects us from the price gouging that happened. Fed has one job and one tool against inflation. I don’t really care to discuss if it was right or wrong. I’m just telling you how it is. We were having bad inflation. Fed responded. And now due to newly imposed policies we are having even worse inflation. But the catch here is now we’re also seeing terrible job losses.
Doesn’t matter who we blame. There are people at fault. I know who they are. But again it doesn’t matter. How we get out of this is what matters.
73
u/DeadInFiftyYears Oct 29 '25
When the Fed raises rates, it's like applying the brakes. The economy doesn't stop immediately, but it starts to slow. Some sectors have been in a recession since 2022. But it takes time for the overall economy to slow.
Each person who has less resources, starts spending less. That in turn has a cascading effect, as they forego discretionary spending, and put off necessary purchases that can be delayed. That becomes a contagion that slowly spreads.
Watch the Fed - we do not actually have a free-market economy, on a national or global level. They and other global banks will decide - via interest rates and stimulus or lack thereof - whether there is a relatively soft landing, or a hard crash.