5 ms·
For the past 7 years, the federal funds rate has been around 2-6% while the monetary inflation rate has been between 4-8%. In other words, interest rates have
by bokonist 18y ago
For the past 7 years, the federal funds rate has been around 2-6% while the monetary inflation rate has been between 4-8%. In other words, interest rates have been negative. This isn't a problem of "culture". People are responding to incentives.
- fallentimes 18y agoThe inflation rate has not been between 4% and 8% each year;it's been between 1% and 4%. Source: http://www.inflationdata.com/Inflation/Inflation_Rate/HistoricalInflation.aspx http://www.inflationdata.com/Inflation/Inflation_Rate/Histor...
- bokonist 18y agoThat's the number for price inflation. Price inflation is monetary inflation minus increases in productivity. Price inflation is useful for determining how standard of living has changed. Monetary inflation ( another word for it is money supply growth or dilution) is the right number to use to determine if interest rates are negative. I was using nominal GDP numbers as the number for money supply growth, although some people use M2, M3 or MZM. Each number has its pros and cons.