In 2004, some economists argued the Federal Reserve should undertake policies to slow the economic inflation..

Question

During 2004, some economists argued that the Federal Reserve should undertake policies to slow the economic inflation. Other economists opposed such policies, arguing that the dangers of inflation were exaggerated and attempts by the Federal Reserve to slow the economy would lead to higher unemployment. Is this a disagreement about positive economics, or about normative economics? Explain.

Answer 1

No argument there at all.
This is what they do, whether we like it or not.
Higher interest rates affect deficit spending by the consumer, (debt), thereby slowing the economy.

It's a delicate balance and the affect of a rise in interest rates as little as 1/4 % can have unexpected consequences, which can be difficult to calculate in advance.

The worst thing our government has done was to overturn the "Usury" law, allowing creditors and banks to charge exorbitant interest rates, such as, up to 30% when a debtor may miss a couple payments. (Read the terms on your credit card).

Any question why consumers have stopped paying on cards when they can't even pay the interest?

The most devastating effect is on businesses and manufacturing.
High rates slow expansion and purchasing of new equipment, therefore affecting new employment. It can also affect the servicing on existing debt and may affect profits to the extent that employees may be terminated when and if all other costs cannot be further reduced. This can have a domino effect.

Bear in mind, even with usury laws under Pres. Carter, consumer interest rates rose above 20%. Savings were producing 14-18 % interest.

Always keep in mind when using a credit card or taking a morgtage with flexible rates, that an increase in interst rates by the Fed, can kill you, It has happened and is.

If China, as promised, should allow their currency to float on the world market, the value will increase. This will increase the cost of goods manufactured there, thereby increasing the cost of goods imported into the US. That can and will affect inflation here. If/when that happens, interest rates will surely increase, affecting all consumer debt.
The unions were the only ones who ever kept up with inflation, but, every time they received an increase in wages, non union employees and those on fixed incomes took a cut in buying power.
Think about it.