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You are right, and some central banks only use the basic interest rate as a remedy in all cases. It seems to me that case 2 cannot be solved through this mechan
by forinti 4y ago
You are right, and some central banks only use the basic interest rate as a remedy in all cases. It seems to me that case 2 cannot be solved through this mechanism.
My feeling is that most media is close to financial markets and gets corralled into its point of view.
- gruez 4y ago>You are right, and some central banks only use the basic interest rate as a remedy in all cases. It seems to me that case 2 cannot be solved through this mechanism. It can. Interest rates rise -> money becomes more expensive -> investment dries up -> demand is quenched -> things become cheap again
- forinti 4y agoIt seems to me that the medicine is worse than the disease in this case.
- lupire 4y agoThe alternative destroys the whole economy. Money is a social construct. If you untether it from any notion of value, it dies, and we're back to barter and subsistence farming or switching to a foreign currency. https://www.investopedia.com/terms/h/hyperinflation.asp https://www.investopedia.com/terms/h/hyperinflation.asp