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Think about it... If your interest rate is higher on any type of credit vehicle it will force you to either reduce consumption or make a trade-off where you purchase a lower price product as an alternative. This impacts individual consumption as well as business consumption while incentivizing savings.
But the question is people should ask why is inflation so high and getting worse every year.
I could see the first or second year of covid with the lockdowns but not now with every thing is open and there has been no lockdowns for long time.
The base reality is that once we truly exited the 2008 recession (late 2010 by GDP but unfortunately 2014 by employment), the "free money" should have ended.
And we shouldn't have pumped $4-$6T into the economy and wallets that didn't need it
What do you mean by cheap money caused this problem?
It kills the demand portion of the supply/demand curve which forces sellers to lower prices, thereby lowering inflation.
The idiot running Turkey didn't understand the above concept and lowered the interest rate in the face of inflation and caused inflation to top 85% in Turkey.
Well even if later on businesses lower the price of goods because less people are buying and because of the high prices now and higher interest rates now what is to stop people going crazy buying later on when the interest rates come down or prices come down or both cussing the same problem?
Inflation is too much money chasing too few goods. A higher interest rate causes the economy to slow because money is tight / more expensive - this slowdown causes reduced demand which lowers inflation.
"Price increases" are not inflation. Inflation is an increase in the money supply, as King John IV posted above. An increase in the money supply raises prices, but price increases for other reasons are not inflation.
You need to tell that to the economic advisers on the news networks and the United States secretary of the treasury or ministry of finance in the UK and Canada as they seem to be wrong on inflation and you know more and they should not be calling it inflation as there master degrees and PhD degrees in economics and finance is wrong.
You need to tell that to the economic advisers on the news networks and the United States secretary of the treasury or ministry of finance in the UK and Canada as they seem to be wrong on inflation and you know more and they should not be calling it inflation as there master degrees and PhD degrees in economics and finance is wrong.
There certainly is no shortage of arm chair economist wanna bees on city data…they got it all figured out when the brightest minds on the planet in the field can’t
Idiotic to you but that's how it works, you don't have to understand it but that's just how it is. I don't understand chemistry very well but that doesn't change the laws of chemistry.
I understand it perfectly. I'm saying it's a stupid approach. It cures nothing that wouldn't have been cured on it's own. Might as well just raise taxes. That will take money from the consumer and lower consumption, too.
There certainly is no shortage of arm chair economist wanna bees on city data…they got it all figured out when the brightest minds on the planet in the field can’t
I don't know if the city data economists have it figured out or not but we can clearly see the "experts" do not.
You need to tell that to the economic advisers on the news networks and the United States secretary of the treasury or ministry of finance in the UK and Canada as they seem to be wrong on inflation and you know more and they should not be calling it inflation as there master degrees and PhD degrees in economics and finance is wrong.
It's not that I know more. It's that I don't have an incentive (and an ability) to lie to the public. And where do you get the idea that I think they're wrong in the first place? I have no idea what any of these people are saying.
I don't know if the city data economists have it figured out or not but we can clearly see the "experts" do not.
The answer is no one does and no one can predict ..at best they guess.
More often then not there is always things not even on the radar yet that alter the course of what we think is eminent or the only way things can play out
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