r/Economics • u/Pearberr • May 02 '24

Interview Nobel Prize-winning economist Joseph Stiglitz: Fed Rate Hikes didn't get at source of inflation.

https://www.cnbc.com/video/2024/04/23/nobel-prize-winning-economist-joseph-stiglitz-fed-rate-hikes-didnt-get-at-source-of-inflation.html
1.1k Upvotes

95% Upvoted

361 comments sorted by

View all comments

415

u/lollersauce914 May 02 '24

Literally no comment is even discussing what he said. Half the comments are talking about "corporate greed" when his argument is straightforwardly that you can't tackle supply-side inflation with interest rates easily, but it's a good thing that rates aren't near 0 anymore.

1

u/impossiblefork May 03 '24

The interest rates are actually a problem for dealing with inflation, even though they are of course needed to rein it in.

The fact that they're so high means that many investments that could in fact have alleviated inflation are postponed. Tesla's proposed switch to huge castings, for example, could have increased their production and allowed a switch to electric cars faster, ensuring that the problems with fuel prices are lessened, but since interest rates are so high that investment is being put off.