The not-so-easy thing about taming inflation
Make Me Smart
Marketplace
4.6 • 5.4K Ratings
🗓️ 24 March 2022
⏱️ 17 minutes
🧾️ Download transcript
Summary
A week after the Federal Reserve raised interest rates, some of us still have questions. Like, why did the stock market respond so positively? And how is making money more expensive really going to slow inflation? Plus, non-fungible tokens and disinformation, and who really owns the data collected by smart vehicles?
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Here’s everything we talked about on the show today:
- Why is the Federal Reserve raising interest rates if supply chain issues are fueling inflation? from Marketplace
- Your questions about cryptocurrency answered from Marketplace
- Blockchain can help combat threat of deepfakes. Here’s how from the World Economic Forum
- Stock markets are supposed to drop when the Fed hikes interest rates. So why are they rallying now? from Fortune
- Who owns your connected car data and how is it used? from Tech Monitor
- John Deere unveiled an autonomous tractor. Will farmers dig it? from Marketplace
Transcript
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| 0:00.0 | Jake, what are you doing man? Come on, clock says 330. There we go. There we go. |
| 0:08.4 | Hello everyone, I am Kimberly Adams and welcome back to Make Me Smart, where we make today make sense. |
| 0:15.6 | I'm Kyle Rizzo, thank you for joining us on this. What do you want to know Wednesday, your questions, |
| 0:20.0 | our answers from the past week or longer ago, frankly, if we dig them out of the mail back. If you've |
| 0:24.8 | got one that you think we ought to answer, by the way, a question that is, leave us a voice, mail 508, |
| 0:29.8 | 827, 6278, or you can send us an email, makemesmart at marketplace.org. We will answer any question |
| 0:36.8 | that comes no matter how it gets to us. We'll see. Speak for yourself. Let's get going on to the first |
| 0:46.0 | question. Yes. Hi, this is Claudia and Nicholas, California. So inflation is increasing, reducing |
| 0:55.5 | consumer's ability to purchase goods and simply gasoline, heating oil, or at least the paycheck |
| 1:02.4 | doesn't go as far. Also, yes. And then the Fed is going to increase interest rate, which will make |
| 1:09.4 | money more expensive to borrow as a way to dampen increasing inflation. I don't get it. Can you make |
| 1:18.4 | this smart? Totally fair. Totally fair. Totally fair question. So here's the deal. Inflation is |
| 1:25.2 | very broadly speaking, too much money chasing too few goods, which is what we have in this economy now, |
| 1:29.5 | right? There's a whole lot of money because people saved during the pandemic. There's a whole lot |
| 1:34.0 | of money because of government stimulus plans. There's a whole lot of money because interest rates have |
| 1:37.9 | been at zero or were at zero until the other day for a very long time. And there are two few goods |
| 1:43.1 | because of the supply chain backlogs that are well documented because of the pandemic |
| 1:49.3 | and the way it mess with this economy. So what the Federal Reserve typically does during a recession |
| 1:54.6 | is increases the price of money. I really like the way Claudia said that, right? Raising interest |
| 1:58.5 | rates is making money more expensive. So it becomes more expensive to borrow thus dampening demand, |
| 2:04.5 | right? If companies and people can't borrow as much money to spend what they want, there is less |
| 2:08.8 | demand for those goods and thus it sort of reaches some equilibrium. The challenge, of course, is |
... |
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