Rate Hikes increase cost of borrowing. Putting more money into the system, making the dollar worth less. Do I have that right? Rate Hikes work by assuming that Americans are smart with their money and will consume less but is this reasonable? It makes no sense to me yet every economists seems to agree.
EDIT: This was probably a bad ELI5. So I appreciate the responses, very helpful. Learning more now.
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You got it wrong at the 2nd sentence. Increased cost of borrowing means money itself becomes more expensive so less money gets printed and dollar value stabilizes.
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