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Inflation happens when money grows more than economic activity. National debt is only one piece of that. Banks could also raise (private loan) interest rates,
by alisonkisk 5y ago
Inflation happens when money grows more than economic activity.
National debt is only one piece of that. Banks could also raise (private loan) interest rates, or be forced to maintain more reserves, leading to fewer loans.
- imtringued 5y agoInflation happens when demand exceed supply. Interest rates have to be raised when we run out of the ability to expand production capacity (primarily by hiring people) to catch up with demand. Having enough work to hire everyone is not a bad thing.