True, the Fed is not obligated to teach the nation fiscal responsibility, but it is within its power. An increase in interest rates would certainly cool down our economy in the short term, as higher borrowing costs discourage business investment, hiring, and spending. All that is temporary, however.
What will replace it is a more conservative culture of borrowing, smarter investment policies (by necessity), and intelligent spending. When money costs what it should, it will force the government, businesses, and consumers to recognize the real value of that money and cut their aspirational coat according to their financial means.
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