Fed does this via monetary policy because the the Overton window in the USA doesn’t allow Congress to do what its job is: to raise taxes via fiscal policy.
What really takes money out of circulation in a targeted way is taxes. This could be a golden opportunity for Congress to tax negative externalities like:
Nonbiodegradeable plastic
Factory farms
Traffic Congestion
Pollution
Fossil fuels at point of
Extraction
Emission
Whatever the market system can’t reduce by itself. That woukd be a much more sustainable system. In fact, I’d recommend giving out a UBI (“stimulus checks”) on a regular basis, paid for by these taxes. That avoids the “Yellow Vests” problem of the taxes falling disproportionately on the working class.
But instead, Congress only knows how to cut taxes, and therefore the Fed steps up to raise interest rates.
In my opinion, it is the very raising of interest rates that causes the recessions and depressions we want to avoid. They can be far worse than any normal inflation, because in many pockets of the country, there isn’t enough money to di basic things.
For an extreme example, look at Sri Lanka. Then they have to take loans from the IMF/World Bank or from China.
The real solution is not to wait for these global hegemons to solve your problem (they won’t) and develop your own currency, to circulate in your own polity. THEN you have enough control for your OWN fiscal and monetary policy.
That is why we started intercoin.org — kind of an outlier in the world of crypto LOL, because instead of get-rich-quick ponzi schemes and coins backed by nothing, it is the extreme opposite.
What really takes money out of circulation in a targeted way is taxes. This could be a golden opportunity for Congress to tax negative externalities like:
Whatever the market system can’t reduce by itself. That woukd be a much more sustainable system. In fact, I’d recommend giving out a UBI (“stimulus checks”) on a regular basis, paid for by these taxes. That avoids the “Yellow Vests” problem of the taxes falling disproportionately on the working class.But instead, Congress only knows how to cut taxes, and therefore the Fed steps up to raise interest rates.
In my opinion, it is the very raising of interest rates that causes the recessions and depressions we want to avoid. They can be far worse than any normal inflation, because in many pockets of the country, there isn’t enough money to di basic things.
For an extreme example, look at Sri Lanka. Then they have to take loans from the IMF/World Bank or from China.
The real solution is not to wait for these global hegemons to solve your problem (they won’t) and develop your own currency, to circulate in your own polity. THEN you have enough control for your OWN fiscal and monetary policy.
That is why we started intercoin.org — kind of an outlier in the world of crypto LOL, because instead of get-rich-quick ponzi schemes and coins backed by nothing, it is the extreme opposite.