Why does the fed keep raising interest rates when gas seems to be the main inflationary item?

Question

Bread and coffee cost the same so where is the inflation? Most of the increases in my business and personal life stem from trickle down from oil prices.

Answer 1

It's made to seem complicated on purpose. Inflation is the cost of goods increasing (supposingly) due to the cost (to make those goods) having increased, which can be due to the increased cost of material, transportation and labor.

However, those with the "Money" (THE BANKS) have a system that is allowing them to totally increase thier wealth, and minimize the political fall-out that happened with the Carter administration.

First off, inflation is never really held at bay . . . it is screened., filtered and hidden with trickery. In the early 80's, the cost of "housing" had been on the rise (Banks make out and they control the value placed on each home).

However, the political impact on the Reagan administration (when he took over from President Carter) in their attempt to (so call) "LOWER" the inflation rate, they took "Housing" out of the "COST OF LIVING INDEX" . (COLI) This served a multitude of "positive" political points. For one, the COLI went down, and since many businesses , including the Government, Military and Social Security) used this index to give yearly pay increases based on the COLI, the general public in general was getting shortchanged. The cost of housing continued to rise, but now everyones pay lagged behind, increasingly year after year . . . except for the wealthy.

Then, the banks gave out Credit Cards to every Tom, Dick and Harriet with interest rates that were totally outrages. The average card holder was paying 20% interest on their purchases. . .this was "personal" inflation, though spread throughout the country on a massive level and again not added to the COLI. Spending went up and Personal Debt went through the roof. (The economy was doing great. . *shaking head*. This practice has worked so well at having the COLI seem like "Wow what a great job" that now the banks have implimented another method of stealing (I mean this) hard earned money.

With the cost of housing skyrocketing "EQUITY" seemed the way to curb the Credit Card Debt by refinancing. More Debt, easier payments. In the past the past few years, many were not able to purchase a home with a normal mortgage, (regardless what anyone says, banks control the price of homes, not supply and demand. The banks approve the loans for the construction projects if homes are needed, the more difficult they make it to get the loan, the more the supply dwindles and prices go up and banks can charge more for loans) . .it is their "approval" that allows the price of the home to rise. This allows greater sized mortages. With high mortgages, the birth of "Interest only" and "Adjustable" loans became very popular, abling the home buyer to purchase a home and defer their "HUGE" payments in a year of two or three. That time is now coming to pay the very inflated interest rates, on loans that had no paydown for the past few years. They will balance the bankrubtcy rate and some people will become desperate, destitute and hungry. . .increasing the supply of "hungry people" , lowering the cost of labor. The Cost of housing may go down, but only to allow more people to buy in at what they feel is now "a Bargain" get a good mortgage, have a million Credit Cards mailed to them already approved. . .go into to debt, find that they now have equity. . .refinance. lower thier overall monthly payment. . ..get more credit cards and the rate of inflation is reported by the President as UNDER CONTROL. . .which is in fact the truth. . .the banks control.

The gas prices should have ruined the overall inflation rate in this country, but with all the money being soaked out of most middleclass pockets on credit card rates, mortgage rates, Home Equity Rates, ATM charges, late fees, insufficient fund charges, (overdraft) . . . we do not notice the penny and dime increases on the general goods when we shop.

Everytime the "RATE" goes up, only the people who owe (not own) pay. . . .ask anyone you know and see if they do not OWE!

Answer 2

What Raymond Z said!

TO add my two cents, the FED was created for the sole purpose of maintaining sound credit conditions with the goal of creating a favorable economic climate in the marketplace. That purpose may have become convoluted over the years but that is what there mission in life is. It's not clear who's marketplace they are trying to maintain either since every segment of the economy will have a different response to interest changes. I am sure they are not concerned with average joe citizen!


I haven't been following the FED lately but I assuming that they have increased the Reserve requirements as well which would cause the interest rates to rise also. Which would make sense, since the price of oil, food, etc. has gone up, theoretically you could see an increase in defaulted loans which the banks would need larger reserves to cover. To maintain a sound economic climate you have to rob Peter (us) to pay Paul (?)

Answer 3

I haven't really seen much inflation in the last year or two. But I would appreciate it if the Fed stopped raising interest rates.

Answer 4

Rising fuel costs are deflationary, its is like a tax and takes money out of the economy so other costs go down as there are fewed dollars left to chase them.

Answer 5

Because they are anal retentive.

Answer 6

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