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To: Toddsterpatriot
If the Fed fights inflation, long term rates will fall.

I'm confused.

I thought the Fed fights inflation by raising interest rates and therefore reducing the amount people borrow, and resulting in constricting the money supply. Therefore they avoid deflating the value of the dollar, so you can buy more for a dollar.

If the Fed fights inflation, interest rates are going to go up.

13 posted on 05/30/2007 10:14:21 AM PDT by untrained skeptic
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To: untrained skeptic
I thought the Fed fights inflation by raising interest rates and therefore reducing the amount people borrow,

Inflation is caused when the money supply grows faster than the economy. The Fed could lower rates while also lowering money supply growth.

If the Fed fights inflation, interest rates are going to go up.

The Fed "controls" short term rates. If they raise those rates, long term rates could drop.

15 posted on 05/30/2007 10:17:18 AM PDT by Toddsterpatriot (Why are protectionists (and goldbugs) so bad at math?)
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