4 ms·
Drive interest rates to zero. Inflate assets with quantitative easing. Handout stimulus money. Provide companies with forgivable loans with little over sight
by not_the_fda 4y ago
Drive interest rates to zero.
Inflate assets with quantitative easing.
Handout stimulus money.
Provide companies with forgivable loans with little over sight.
Who would have thought we would have inflation?
- supertrope 4y agoIn 2020 businesses were expecting a collapse in demand and possibly years before a working vaccine. The current administration chose to “go big” on stimulus in 2021 and accept the risk of inflation rather than under react like 2008-2009 and have the country slog through years of high unemployment.
- not_the_fda 4y agoI don't disagree that some of those measures were needed, but they went to far. You can look at the broad stock market and see when the stock market started falling and the fed stepped in. They over corrected and stocks went way above trend line during a period when nobody was going anywhere. They handed out money to people who turned around and yoloed it on crypto and meme stocks. The time to turn off the money was last year when vaccines became available. The consequence of that inaction is now years of stagflation.
- imtringued 4y agoWhy would zero interest rates imply inflation? Prices are driven by supply and demand. If the supply of physical capital exceeds the demand for physical capital it is only natural that the interest rate is 0%. If capital depreciates and needs replacement over time then it is even logical for the interest rate to be negative if people produce too much. The interest rate is no longer at zero so we are already past that.
- not_the_fda 4y agoBecause its free money. If you can borrow money at less than the rate of inflation its free. Free money drives up prices because you have more dollars chasing the same assets. See the housing market.