The goal of this outline is to answer a frequent question about what the alignment of government and private sector officials mean when they say, "managing the transition." Some of this is self-explanatory, some of this has been astutely explained by others (with specific reference points), and some of it is what they cannot say publicly.
Raising interest rates into a contracting economy is counterintuitive, it runs against the expressed interest of government to grow economic conditions.
- However, there is a purposeful design to the contradiction
The central bankers are trying to support western government policy
- They are raising interest rates in order to tame inflation by "taming demand."
- Raising interest rates into an already contracting economy only does one thing, it speeds up the rate of economic contraction.
- When the economy turns negative, meaning less products and services are produced, we enter a recession. During recessionary periods people buy less stuff, people have less income stability, and economic activity drops. During this period, energy use and prices always drop.
The banks and policy makers have entered a phase where it is in their interests to shrink the global economy
- They are trying to control the collapse of the various economies by working together.
- This means less jobs, less work, a lower standard of living, and a period of extreme financial pressure for the average person.
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