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When the FED wants to fight inflation, it raises interest rates, which sets up a chain reaction in the economy.
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We build this machine to show you how it works.
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It all starts when the FED makes money more expensive for big banks and hedge funds, and that pushes up short term and long term rates.
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Now, more people want the dollar, making it stronger and stronger. And more people want bonds, so stock prices fall.
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So, while you might earn more with your savings account, you'll pay more on your credit cards and loans.
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This might make you buy less,
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which means businesses could sell less, hire fewer workers, and put things on sale.
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All slowing the economy, and everything goes as expected, inflation will fall.
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But, it's a delicate system, and there're a lot of places where the machine could fail, so, like many of us,
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the FED will be watching the economy to see what happens next.