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I don't think this can be solved by just tweaking interest rates. The fact is there are a lot more dollars in the field chasing the same number of products. Mak

by bko 5y ago

I don't think this can be solved by just tweaking interest rates. The fact is there are a lot more dollars in the field chasing the same number of products. Making it marginally more expensive to borrow money won't sop up enough dollars to prevent price inflation. Don't you love it how banks are not raising their interest rates on savings accounts? I remember in 2007 I was getting 4% on my savings accounts. There's nowhere to park your money and earn a return even approaching inflation. Why not just front-load your future purchases and further drive inflation?

recursivedoubts 5y ago
I don't think the physical amount of dollars matters as much as most people do. Credit spends the same as money, so I view total credit as the real thing to watch. That's one reason why, given the insane fiscal and monetary policy of the last two decades, we really haven't seen hyperinflation yet (and, in fact, briefly saw deflation.) It's an unorthodox take, admittedly, but Steve Keen is a good economist to read on the topic.
- bko 5y ago
  Total bank credit jumped 5% in about a month when the pandemic started and is continuing to grow at a very high rate historically. This is in addition to personal savings rate jumping from around 7% to over 30%. There's a lot of money and credit is amplifying it https://fred.stlouisfed.org/series/TOTBKCR https://fred.stlouisfed.org/series/TOTBKCR https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT
pmorici 5y ago
You can get 8% on stable coin deposits with Gemini Earn and BlockFi. After taxes it’s probably still a slight loss.
- deleted 5y ago
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