Fed does not fight inflation - it causes it July 10, 2022
(Frank Shostak) Fed officials believe that the correct approach to counter this massive increase in the CPI is to raise interest rates. A tighter interest rate stance, it is held, is going to cool off the demand for goods and services. This in turn, is likely to weaken the growth rate of the CPI, labeled as inflation. This is based on the central bank planners’ view that to place the economy on the trajectory of stable prices and stable economic growth it is necessary to raise interest rates.
Also, note that officials are of the view that at present the key drivers of inflation are various negative supply shocks that emanate from factors such as the response to covid-19 and the Ukraine-Russia war. In this way of thinking, it makes sense to curb the demand for goods and services by raising interest rates in order to place the demand in line with the curtailed supply.
By defining inflation as increases in the prices of goods and services, Fed officials have absolved themselves of any responsibility for massive increases in the growth rate of the CPI. By this definition, in addition to various unexpected shocks, producers and businesses are also to blame for the widespread price increases. If Fed officials were to concede that inflation is about increases in the money supply, then they would have to accept that the key cause behind strong increases in prices is the alleged inflation fighter the Fed itself.
https://www.silverdoctors.com/headlines/world-news/the-feds-tightening-will-only-drag-out-the-economic-slump/