Watch the Federal Reserve's interest rate decisions explained through a Rube Goldberg machine
The U.S. Federal Reserve's decision to raise its benchmark rate on Dec. 16, for the first time in a decade, was unanimous, but how quickly it will raise rates again is an open question — and one that will be vigorously debated as new, more hawkish voting members of the Fed's rate-setting Federal Open Market Committee take their seats in 2016, The Wall Street Journal predicts. Disagreement makes sense, because trying to steer a massive market economy like America's through interest-rate adjustments and monetary supply is an arduous balancing act.
If the Federal Reserve's rate deliberations seem sort of abstruse, or make your eyes glaze over, The New York Times created a Rube Goldberg machine to explain how the Fed uses a rate hike to try to tame inflation. A complicated chain of events is actually a pretty good way to explain the intended consequences of a Federal Reserve action — you can see why stock markets fall, for example — and if nothing else, it's always fun to watch a Rube Goldberg machine in motion. Hopefully, the inventive team at The Upshot will modify the machine to show how the Fed tries to affect the other part of its mandate: Boosting employment. Watch below. Peter Weber
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Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.
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