In this discussion, Dr. Shiva Ayyadurai, MIT PhD, The Inventor of Email, explains what the upcoming Fed Rate Hike means from a system dynamics approach for all to understand. Dr. SHIVA is committed to education and innovation as he believes these two elements are critical for human advancement.
The original research in this video is made possible by generous contributions from supporters of the Dr.SHIVA Truth Freedom Health® movement. Please contribute so we may continue to bring you such original research, valuable education, and innovative solutions.
Key Points
- The United States theoretically is supposed to operative in a flourishing free market. In reality, the US operates under Monopoly Capitalism.
- The US Government, in collusion with the Federal Reserve Bank, intervenes in the US economy to try and sustain Monopoly Capitalism.
- Those in power who profit from Monopoly Capitalism create artificial boom and bust cycles in which they control the rising and falling of prices to their advantage.
- Over the past few US Presidential Administrations, trillions of dollars have been printed to fund the interests of those in power. This spending has driven up inflation, as supply of goods and services has not kept up with demand.
- The Fed is choosing to impose higher interest rates on the lending of money in order to put the brakes on demand and bring down inflation. As a side effect, this will raise unemployment.
- Raising unemployment will lower the cost of labor which will benefit those in power at the expense of working people’s income.
- Both problems: inflation now, and unemployment later, are artificially-created problems as part of the boom/bust cycle that is imposed on the world economy by those in power.
- Only a bottom’s-up movement of working people can organize to build a parallel economy that can sustain working families independently of the machinations of the elites.
- Raising your consciousness with the Truth Freedom Health® system is absolutely necessary to build such a movement.
The United States theoretically is supposed to operate in a flourishing free market. In reality, the US operates under Monopoly Capitalism.
The theory is that you have a capitalist economy and it’s driven by market forces, where people are supposed to go out there and they just do their thing. Well, people found out that capitalism has some fundamental problems.
They thought it should be this free market economy. Well, starting in the 1920s in the United States, when this crash took place, we went into this model called Keynesian economics basically meaning the government is going to intervene, there is no real capitalism.
When the government intervenes, they’re going to use the manipulation of interest rates, to modulate the economy. The theory is that the Federal Reserve will manipulate interest rates.
The US Government, in collusion with the Federal Reserve Bank, intervenes in the US economy to try and sustain Monopoly Capitalism.
The way to think about this is the brake and pedal analogy. If you drive a car or even if you ride a bicycle. The pedal is the accelerator. It is the thing that moves you forward, gives you acceleration and the ability to move and the brake is the thing that slows things down.
When the government intervenes, they’re going to use the manipulation of interest rates, to modulate the economy using this brake and pedal analogy. The theory is that the Federal Reserve will manipulate interest rates, by sometimes putting on the gas and sometimes putting on the brakes, to create a stable economy.
Those in power who profit from Monopoly Capitalism create artificial boom and bust cycles in which they control the rising and falling of prices to their advantage.
When you lower interest rates, that’s literally like “gasoline.” Lower interest rates first thing gas in the economy is when you’re lowering the interest rates and that’s what was done for a while now and we stimulated it right.
What does lowering interest rates do? Well, lowering interest rates one of the most important things, it does is the following: it affects consumer spending. Which means what you do, like going and buying gifts for your friends.
Going Christmas shopping or whatever, and what that does to consumer spending is, when you lower interest rates, you take out your credit card and you start using it so it increases consumer spending.
Now you increase consumer spending, but it also will inversely do something else, which will lower personal savings because you go into your savings and you start spending. So that’s a phenomenon that happens so personal savings come down.
So, lowering interest rates also affects your personal savings, it increases consumer spending, but the other thing that also happens is for some, this will also increase investment in their companies.
Investment in companies, those companies will buy more equipment, products etc? You can now get it at a better rate. When you buy equipment like cars, or whatever you need.
So these are the three things that you can see happen when you lower interest rates. Your consumer spending goes up, personal savings go down and investment in companies increases.
And what does this lead to? Well, this leads to one of the fundamentals in economics called demand. Demand. Because that means that you have demand for goods. So all of these things combined together will increase demand. You’ll see demand go up.
Over the past few US Presidential Administrations, trillions of dollars have been printed to fund the interests of those in power. This spending has driven up inflation, as supply of goods and services has not kept up with demand.
The establishment has said that because of the Coronavirus pandemic they had to press accelerate to boost the economy. So what did they do? They put out a lot of money.
Obama printed about 8 trillion over two terms, Trump printed about $6.9 trillion to stimulate the economy, and Biden has put in about 2 trillion out there and they kept the interest rates low.
These are the three things that you can see happen when you lower interest rates. Consumer spending goes up, personal savings go down and investment in companies increases.
And what does this lead to? Well, this leads to one of the fundamentals in economics called demand. All of these things combined together will increase demand and you’ll see demand go up.
When you have increased demand for goods, and you don’t have enough supply, which was accentuated in this case, and the price of goods went up. Inflation went up, because we didn’t have enough supply and there was demand.
The Fed is choosing to impose higher interest rates on the lending of money in order to put the brakes on demand and bring down inflation. As a side effect, this will raise unemployment.
The Feds logic is putting on the brake and if we don’t have enough supply there’s too much demand. When you have high demand, not enough supply prices go up, you get inflation. And to control inflation, we’re gonna put on the brakes by raising interest rates.
So, one of the things that happens when demand goes down, you’re hoping with the supply that’s out there, people can catch up, but you’re also creating the condition that this could happen. Employment goes down, which means unemployment increases.
Raising unemployment will lower the cost of labor which will benefit those in power at the expense of working people’s income.
With Increased interest rates, immediately consumers stop spending, savings go up and investment in companies comes down. This results in less demand for goods, GDP will likely go down, and we will start producing less. The employment will go down.
Some experts say that this is going to result particularly in when investment goes down in companies, the stock market is going to have a significant decline, another 20% decline. That’s the point where the United States GDP goes down and wages will drop with it.
Both problems: inflation now, and unemployment later, are artificially-created problems as part of the boom/bust cycle that is imposed on the world economy by those in power.
This is the Feds approach, they pump a lot of money in. This lowers the interest rate. When you lower the interest rates people go spend. They deplete their savings, investment goes into companies and more money goes into the stock market while demands for goods go up.
We were having a pandemic when there was not enough supply. So that means inflation hits because we have the price of goods going up as well. The other thing is people start producing less because you don’t have enough people working.
Here comes unemployment and because companies are producing less goods now, the GDP will also come down.
All this means the world economy here is slowing down, we’re going to have people in the US who are not going to be buying as many goods, which means we’re not going to be importing. The United States gets most of its imports from Europe, and China.
Exports out of the European Union are going to go down. That means that the GDP of the European Union is going to go down. That means the imports into Europe are going to go down, which will mean that’ll affect China.
Which means the exports out of China are going to go down, and the GDP in China will go down, and the demand for goods in China also go down. This becomes an economic decline that spreads around the world.
The main reason is because the US is a $22 trillion economy, China’s is a $10 trillion economy, India’s is around 3 trillion. So, whichever way the United States moves, this will affect the world economy.
Only a bottom’s-up movement of working people can organize to build a parallel economy that can sustain working families independently of the machinations of the elites.
Join the VASHIVA community – an integrated EDUCATIONAL, COMMUNICATIONS – independent of Big Tech – and LOCAL ACTIVISM platform to empower YOU to actualize Truth Freedom Health in your local communities by employing a SYSTEMS APPROACH.
The platform we are building for Truth Freedom Health® provides the infrastructure to take on Big Tech, Big Pharma, and Big Academia. Many of you have asked how you can help.
You can contribute whatever you can. Based on your level of commitment to get educated, I have also created some wonderful educational gifts to thank you for your contribution.
Raising your consciousness with the Truth Freedom Health® system is absolutely necessary to build such a movement.
Everything is connected and Truth Freedom Health® – the inner connections with freedom, which means a movement of information, matter and energy, or freedom, the ability to share stuff openly, to speak freely.
We show the interconnections between freedom and truth so we can practice a scientific method, and with that, we can come to truth. When you have both of these things, you get to health and with health, you can actually fight for freedom.
So they’re all interconnected and It is Systems Science, which everyone should learn. We put that together in a format, and we’ve created a system that allows you to learn Systems Science
Which includes a course, which includes a community, which includes activism. Fundamentally, it is the knowledge of systems that’s going to get us Beyond Left & Right. Beyond Pro & Anti to really see things as they are.
Otherwise you’re gonna be bamboozled all day long. We all have to raise people’s consciousness by being a catalyst by providing these educational courses and materials, the rest is really up to everyone else.
It’s time we move beyond the Left vs. Right, Republican vs. Democrat. It’s time YOU learn how to apply a systems approach to get the Truth Freedom Health you need and deserve. Become a Truth Freedom Health® Warrior.
Join the VASHIVA community – an integrated EDUCATIONAL, COMMUNICATIONS – independent of Big Tech -, and LOCAL ACTIVISM platform to empower YOU to actualize Truth Freedom Health in your local communities by employing a SYSTEMS APPROACH.
The platform we are building for Truth Freedom Health® provides the infrastructure to take on Big Tech, Big Pharma, and Big Academia. Many of you have asked how you can help. You can contribute whatever you can. Based on your level of commitment to get educated, I have also created some wonderful educational gifts to thank you for your contribution.
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