Raising Interest Rates: A Misguided Approach to Combating Inflation

The Federal Reserve Chairman, Kevin Warsh, recently raised interest rates to combat inflation. The current rate of inflation is 3.4 percent, which is still above the Fed's target of 2 percent.

Warsh emphasized that the 2 percent inflation target remains a 'firm, fixed target.' However, some experts argue that raising interest rates may not be an effective solution to combat inflation.

Inflation was historically defined as the artificial increase in the money supply. This occurs when a country's ruler devalues its currency by mixing it with other metals and returning diluted coins to citizens.

The current understanding of inflation, which focuses on price increases, is based on a flawed definition. Raising interest rates may only address symptoms rather than causes, leading to further economic hardship.