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“This is why interest rates are an effective tool for lowering inflation” Increasing interest rates just increases government transfer payments but the money g
by dools 2y ago
“This is why interest rates are an effective tool for lowering inflation”
Increasing interest rates just increases government transfer payments but the money goes to people who already have money, and they happily spend it.
Any reduction in spending is matched by an increase in a different demographic.
Once the central bank starts increasing interest rates that’s what drives inflation.
The real reason increasing interest rates is a popular response to inflation is because of academic capture by right wing libertarians, all to benefit the wealthy.
After all, if there are inflationary pressures it’s the creditors that lose out unless they can charge more interest.
- hifromwork 2y agoIt's easy to criticise, but what do you recommend? Lowering interest rates to fight inflation? I think Turkey keeps trying this, without much success.
- datavirtue 2y agoMore than one interest rate, for starters. Why do home purchasers have to suffer while the fed reigns in funny-money (buying stock with no interest loans) "investors."
- dools 2y agoThe #1 thing that brings prices down in a market economy is competition. Fiscal policy is the best policy tool for ensuring a level playing field, ensuring full employment and price stability. Monetary policy is good for nothing! ZIRP forever
- Aeolun 2y agoLow interest rates seem to help Japan keep inflation (and thankfully, big mac prices) low anyway.
- FabHK 2y agoJapan has been fighting with deflation for a long time, and kept rates extremely low as a consequence, and also engaged in QE.