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So, do you feel that the focus of the central banks to keep interest rates low and inflation low is to protect the lower class? I would submit that what the cen
by cudgy 4y ago
So, do you feel that the focus of the central banks to keep interest rates low and inflation low is to protect the lower class? I would submit that what the central banks want is to benefit the main asset holders who suffer the most from erosion by inflation.
- NoboruWataya 4y agoAsset holders do not suffer the most from erosion by inflation; asset holders benefit from inflation (which is a devaluation of the currency) because the price of their assets increases. It is those whose wealth is mostly in cash that suffer the most. Keeping interest rates low keeps inflation high. Raising interest rates reduces inflation but also hurts asset prices and can potentially bankrupt some heavily indebted businesses. This is the balancing act the central banks have been trying to perform. The reality is that getting it wrong in either direction hurts the lower class: excessively high interest rates lead to high unemployment; excessively low interest rates lead to high inflation.
- cudgy 4y agoInteresting. When did cash cease being an asset?