With the economy falling apart, the Federal Reserve is in the middle of a campaign to cut interest rates and help get things moving again. But the Fed is also in charge of keeping a lid on inflation — something that usually requires raising rates. But why, some readers are wondering, is the Fed still worried about inflation in the first place?Why is the Fed worried about inflation when typically it is caused by too few goods being chased by too many dollars. Isn't the problem now is that inflation is tied to the rise in energy costs — something over which we have little control?
— Larry G., Owens Cross Roads, Ala.
The simple answer is: the Fed is worried about inflation because that’s the Fed’s job. Just because there are no house fires burning at the moment doesn’t mean the folks at fire department can all go home.
Read More
