#12 - It is primarily by raising interest rates that central

[annabelle.swift]

To sum up, the argument is structured as follows:

• Premise: Bankers curb inflation by raising interest rates.
  
  Premise: Increase in interest rates take up to 2 years to affect inflation.
  
  Sub. Conclusion: Accordingly, bankers try to raise rates before inflation becomes excessive, when it's not readily apparent.
  
  Sub. Conclusion: When bankers do that, they risk being perceived as needlessly restraining a growing economy.
  
  Conclusion: Thus, success in temporarily restraining inflation makes it harder to ward off future inflation without incurring the public's wrath (i.e without being perceived as needlessly restraining a growing economy).

How specifically does the last sub conclusion support the main conclusion?

Bankers' success in temporarily restraining inflation (by increasing interest rates before inflation is apparent) incurs public wrath because it is seen as needlessly restraining the economy.

However, how does this affect future attempts to restrain inflation? Is the main conclusion saying that each time bankers increase rates when inflation is not apparent, that causes every future rate increase to be perceived in an even worse manner by the public? Why would that be the case?

[Robert Carroll]

annabelle.swift,

If central bankers are successful at temporarily restraining inflation, then, by definition, inflation will be curbed. This will make inflation less apparent. If inflation is less apparent, interest rate hikes will be seen as needless restraints. So a central banker who curbs inflation in the short term will be operating in conditions where, even if future inflation curbs are necessary, it doesn't look like they are - the very success in restraining inflation makes it look like inflation is no longer a problem. But, as the stimulus points out, inflation can be a future problem that can only be handled with present action. So, restraining inflation in the short term can make it seem to the public as if inflation is not a problem and that measures like interest rate hikes are unnecessary (even though, from an objective perspective, they are necessary). This is how that subconclusion supports the main conclusion.

The stimulus is not saying that success makes future, similar attempts be perceived as increasingly worse in the future.

Robert Carroll