&gt; AFAIK, The FED is so far removed from the consumer that banks, credit card companies, and PayDay Loan store-fronts determine interest rates rather than the FED<p>Fed sets short term interest rates in the entire market (including what the consumer sees) through FFR. That&#x27;s why everyone is having such a fun time speculating when it will raise the FFR, thereby raising short-term interest rates for the entire economy.<p>In a traditional economic model, raising the short-term interest rate deters spending in the real economy and encourages saving as it allows a return on low-risk activities - savings accounts and bonds.<p>Clearly, having the interest rate at 0% has not spurred spending&#x2F;consumption as the Fed had hoped post 2007. So they embarked on QE to push money into banks with the hope that these institutional gatekeepers would find good things to do with the trillions of newly minted dollars. Now banks are sitting on lots of money and have inflated the stock market and have most likely made an outsized number of dumb bets in the emerging country debt market, as well as the Chinese real estate market.<p>In my opinion it makes no sense for the Fed to either raise or lower the interest rates. While this would spur the banks into action (lowering would make them take riskier bets, raising would allow them to put more into bonds) it would not fix the underlying deficit of aggregate demand. The Fed keeps pushing on the supply side. We need the government to push tax dollars efficiently into sectors that will spur aggregate demand. R&amp;D, infrastructure, education, and war are all examples of long-term investments that will grow demand over decades rather than a few years before another bubble (as we&#x27;re finding out now).<p>I doubt we&#x27;ll see either hyperinflation or hyperdeflation because the supply of money in the real economy is efficiently limited by the banks. Unless the Fed was to conduct a helicopter drop and start a round of QE that fed directly to the consumers, we won&#x27;t see a meaningful change in the currency in circulation, which is what causes hyperinflation&#x2F;deflation.