If you go read up on the history of central banks using interest rate hikes to generate recessions to tame inflation its pretty damn consistent that they often end up overshooting and making things worse than they needed to be to achieve the same result.

[–] [email protected] 5 points 4 months ago (1 children)

Just to add to that, im not much of an economist or anything but my understanding is there's 2 main levers that can be used - interest rates (monetary policy?) and tax rates (fiscal policy).

Its become orthodox to use the former & ignore the latter, partly because of voter backlash & it can be a bit complicated. But as far as I understand it given sovereign governments can print money & borrow when things are bad to generate economic activity the flipside would be to tax it back out and save it to reduce the supply of money chasing goods.

Some folks argue that would be a tidier way of doing things, who knows?!

https://www.slowboring.com/p/tax-increases-are-the-best-cure-for https://www.corporateknights.com/category-finance/seven-ways-to-tackle-inflation-without-raising-interest-rates/

[–] [email protected] 6 points 4 months ago

We can't do that because tAxAtIoN iS tHeFt.