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Challenges of Managing Inflation and Interest Rates
This chapter explores the Federal Reserve's challenges in reducing high levels of inflation to reach the target of 2% and the implications on financial conditions and the economy. It discusses strategies like government spending financed by money creation, past financial regulations, and the shift towards mutual fund banking. The conversation also predicts a future trend towards 100% equity financing by financial intermediaries to reduce risk and examines the complexities the Fed faces in addressing inflation, real interest rates, and implementing monetary policy.