Inflation happens when more people "demand" something than there exists enough "supply" of it. This gets resolved as sellers increase their asking price because they can, because there's more demand than supply.
As more and more sellers of different things find the ability to do this, everything starts to cost more, and that is inflation, which can really be called price inflation.
Deep breath. Okay.
When interest rates are low, it's cheap to borrow Other People's Money to do your thing. If your thing is making more stuff that people want and making it better and cheaper, then demand goes higher and the problem gets worse.
So, the Federal Reserve Bank was invented, about 100 years ago, to decide what the interest rate would be. They get the option to change it whenever they want, but they make it into four wild guessing games every year and stock prices move because of it.
If they think demand is getting too high, they raise the rates, which makes it more expensive to borrow OPM, so less of it happens, and then (in a perfect world) inflation is defeated. Yay!
If the economy is growing too slowly like most people think it is now, then they will probably drop interest rates at least keep them low like has been the case since about 2008.
Memorize that and you can skip Economics 101. Maybe 102 as well.
If you're interested, we should talk a bit (for free). I specialize in education and collaboration that includes the professional stuff done without the high cost. And I give customers the same professional tools that are usually limited to the yacht-owner crowd. Let me know!
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