Economics & Everything elseThe blog about human needs and limited resources

After reading an article in Forbes magazine my suspicion that the Federal Reserve is heading in the wrong direction was confirmed. The same problems happened to Latin America when external forces caused inflation to soar as exports declined. For a number of years inflation kept on increasing as central banks continued to borrow from other countries. Eventually the government had enough of this and decided to combat inflation by suspending government spending significantly and by the central bank increasing rates, it worked. As far as I can tell the United States is in the same position as the Latin American countries even though we know what to do, rather than try to spur the economy I think we should let it free fall. Let all the companies that decided to exercise bad business practices fail for their stupidity.
When I was taking economics in high school we were told whether or not we would want to increase rates to lower inflation or decrease rates to help the unemployed. It turns out that the philips curve has been denied it’s god given right to dictate that one action comes at the price of another. Rather than unemployment going up as a result of all the increase in rates both inflation and unemployment are increasing at the same time. I think it’s time for the fed to finally step in and try to save what’s left of the economy, then again I don’t have a Ph.D in economics.