Reference no: EM133131744

Briefly summarize this conclusion:

"The Fed has kept interest rates low for a substantial amount of time. As a result, other alternatives have been employed to keep economic activity robust in the U.S. The unfortunate, yet unsurprising, consequence has been a high government deficit and excessive household and firm debts. Moreover, the overstimulation of economic activity has led to an inflation surge with the current CPI being 7%. The Economist (2022) provided an example of how too little intervention on one end while intervening too much on the opposite end will hardly ever lead to sound economics. The need to raise interest rates to curb the current inflation trajectory is going to hurt economic activity through the debt repayments as consumers in the U.S. are sensitive to interest rate changes. The overall effect is that the U.S. consumers are in for a rollercoaster ride over the next two years at the least, albeit a mild one if inflation responds favorably to the interest rate spikes."