You are confusing a couple of things I think. The FED doesn’t have absolute control over the interest rates in the general market. They only control FFR which is the interbank rate. Banks are not lending to each other right now because they don’t know who is solvent and who is not.
That situation can and will lead to higher unemployment at some point.
You still have not explained how we can’t have a recession and inflation simultaneously. I can explain it…we already had the inflation…only it was largely within a couple of different asset classes namely Real Estate and the Financial Sector (hedge funds). That is where the money went…well it went there and ultimately ended up on wall street after realtors, mortgage brokers, securitizers, Bond Insurers, etc, took their cuts from the money. Volcker raised rates because he took monetarist view of the problem as opposed to a supply side perspective. He hastened a recession that might have been worse otherwise. It needs to happen now as well.
