4 ms·
Inflation and base interest rates are not the same thing, though they usually affect each other. If inflation is higher than the base rate, then people tend to
by sz4kerto 11y ago
Inflation and base interest rates are not the same thing, though they usually affect each other. If inflation is higher than the base rate, then people tend to spend more as money is losing the purchasing power.
The problem is that inflation can't be simply 'set'.
- trhway 11y ago>then people tend to spend more as money is losing the purchasing power. They spend on smaller things, and are losing the ability to spend on bigger, long term things like cars, houses, education, starting their own business, etc.. I lived though different levels of inflation - USSR and Russia of 199x - and i can say no inflation is good. The inflation we have right now in US - 2 times in 10 years - is among the lowest i've experienced and about the best economic environments.