Monday, September 26, 2022

Inflation vs Recession

Although conventional wisdom around FED's mandate is to control inflation over recession - there is a different point of view which needs to be addressed. 

It is true that recession is fear among the poor class more - as they tend to lose jobs and it disturbs them more. Recession does impact everyone but not entirely and not as much as inflation. Inflation means price of every product and services goes up and no matter which class you belong to - you will feel the pain. In that regards, Fed is correct in addressing Inflation with higher priority even though it brings Recession. 

However, the different side of Recession vs Inflation is that, common people can not fight recession on their own, however they can in a way control Inflation - by buying very limited items or only much needed items. I believe in general philosophy that, "Whatever People can do, People should do. Whatever people can not do, Government Must Do." Although - controlling inflation is not entirely government responsibility - (It is Fed's responsibility - which is sort of Government institution). 

Poor and Lower middle class people can not create jobs and can not take necessary steps to come out of recession, However they can control their spending and in a way tackle inflation by reducing the demand side. So, Fed should perhaps slow down on their auto pilot mode of rate hike and let the steps they have taken control inflation - but if not slow down so that they do not bring severe recession - which they can control but people can't. 


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