[ntkachov]

"They" being the Federal Reserve, who's mandate is to balance unemployment and inflation. So yes, Cars, homes and everything else in the Fed's basket of goods needs to stop going up by 6%/mo. The Fed is limited in their toolset, so in order to do that they can raise the federal funds rate basically causing any loans given to have a minimum APR (Why lend to Jack for 5%, when Uncle Sam will give you 6%). So if you're taking out a loan, your payments are going to be more expensive. Thats going to nuke lower return investments and make borrowing to grow your business harder.

[eganist]

> The Fed is limited in their toolset, so in order to do that they can raise the federal funds rate basically causing any loans given to have a minimum APR

The Fed is limited much the way a surgeon would be limited if they had to manage a tumor with a mallet.

The solution here would've been targeted taxes to extract the excess liquidity that pooled up in the economy after all the loans and grants, but with a deadlocked legislature this was not going to happen. So, mallet it was.

[kriskrunch]

Why is the answer often to raise taxes? Wouldn't less government spending and a higher fed rate have been even better and more efficient?

Inflation was already high when the last large spending package passed and succeeded in over stimulating the economy.

[amluto]

> 6%/mo

Come again? We’re at 6% year over year, which is not even close to 6%/mo.

[bobbylarrybobby]

I assume they meant 6% annualized each month, so 1.06^(1/12) - 1 = 0.4868%.

[devoutsalsa]

To use startup lingo, it’s a 6% run rate.