The Fed

The people at the Fed, both today and in the past, think they can control inflation by manipulating interest rates and creating money but they always seem to come up short. They held rates down to close to zero for 12 years while they were buying $120 billion per month of government debt. They thought they could just stop buying debt and raise interest rates to control inflation but the same government sent out trillions in free money to consumers who quickly started spending. The result is inflation and now if the Fed raises interest rates it will add to the cost everyone pays and while they say they will raise rates six times this year they probably will not since that would add to higher cost. Also they say they will stop buying debt but that will not happen because other countries will not buy it. This year will probably see continued inflation, higher interest rates and there is a good possibility of negative GDP and two quarters of that means recession. Two years ago the Fed had $4.2 trillion in debt and today that stands at $9 trillion and going up at $120 billion per month. The Fed has boxed itself in.