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I think central banks cause deflation by increasing money supply through lower interest rates. Here how that may works the newly created money does not flow to
by acd 6y ago
I think central banks cause deflation by increasing money supply through lower interest rates. Here how that may works the newly created money does not flow to wage inflation they flow to investing in more automation software/robots/machines. More automation is deflationary products become cheaper to produce lowering their cost to consumers. Further more, wages are no longer local through globalization so local central banks cannot fully control wage inflation on a global market as cheaper wages products from foreign wages are imported. There has been a race to the bottom from central banks on low interest rates where countries has competed in lowering their currency by lower interest rates. This cycle is now somehow broken.
Interesting that the interest rate will go up and the potential effect on mortgages.