Tuesday, Dec 08, 2015

Possibly not the way it works.

Telegraph: For all their big spending central banks cannot control inflation

This is a fairly humdrum article apart from "It could be that near-zero interest rates actually depress inflation" which is what I personally believe. It is hard to see how reducing interest rates to the extent that prices go to the roof is meant to encourage further credit expansion. Or put it another way, the people who made the biggest gains from housing bought when interest rates were high. So when interest rates are forced up, and it is forced its not the natural economy its purely government and central bank debasement, then imo there will be an explosion in credit expansion and reasonably enough the central banks will struggle to control what is easy money for nothing. As usual the big loser will be the naive sterling saver.

Posted by stillthinking @ 03:01 AM (3852 views)
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