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It’s pretty tightly linked. Lots of loans don’t happen when interest rates go up. On the consumer side , car loans, mortgages , etc. on the biz side, capital lo
by nilsbunger 4y ago
It’s pretty tightly linked. Lots of loans don’t happen when interest rates go up. On the consumer side , car loans, mortgages , etc. on the biz side, capital loans and lines of credit. All of this significantly reduces purchases and money in our pockets, thus putting downward pressure on gdp and demand.
- marcosdumay 4y ago> Inflation is high because demand exceeds supply. That's the part that is wrong. It's wrong by definition, because demand and supply are the same thing. It's also wrong because inflation is an unrelated phenomenon. Raising interest rates does normally (not always) reduce the economic output. Nobody is disagreeing on this.
- the_optimist 4y agoMarginal demand > marginal supply, so price is bid up. This is not even 101 stuff.