The American economy is suffering inflation. What will stop it?

Question

The economy is in a downturn right now. What do you think will make it improve?

Answer 1

It's not only the American economy that is suffering inflation.  The American economy is a part of the global economly.  And the inflation in USA is a part of a global inflation that is present in virtually every country of the world.

And in global economy with global inflation only a global solution would work.  No single country can solve this problem on its own within its own borders only.  Not even USA.

The main cause of present inflation is low interest rate in USA and in virtually every other country.  Every country wants to stimulate indefinite economic growth.  And that's simply not possible.  Because of limited natural resources.  And because of excessive borrowing by many people.  

There is a need for a slowdown of economic growth in order to allow the production of oil and other natural resources to catch up.  And there is a need for a slowdown of borrowing in order to allow people to pay off their debts.

Higher interest rates in countries that still have rapid economic growth is what's needed to slow down the global economic growth to a sustainable level.  And this of course will decrease the global inflation too.

Answer 2

The answer to the first question is quite simple. Stop increasing the supply of money so rapidly. The answer to the second is exactly the same answer as what restarted growth in the downturn of the early nineties: investment opportunity. At some point, people will tip from fear of further weakness to focus on the buying opportunities in depressed assets -- equities, real estate.

Answer 3

Whilst increasing rates is not the way to solve it (less access to money), interest rates shouldn't be cut so vigourously either. This is a big cause of inflation because money is more easily borrowed, and the increased demand for goods and services causes inflation.

Answer 4

increase interest rates, and Bernanke can fly around on his helicoptor and pass out welfare checks while he's picking up those mortgage payments.

Answer 5

Raising interest rates would stop inflation.  However, it is not a very effective idea right now. It would slow the economy if interest rates went up.  I'm not sure what will make it improve...except for the economy growing through more buying, etc but that won't happen soon and even if it does happen it has to occur within people's means- spending too much would be bad.