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