How Rising Interest Rates 'Control' Inflation

How Rising Interest Rates "Control" Inflation #Shorts

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[Soylent]

What you aren't saying, "price floors quickly form and those prices actually won't come down"

[zhain]

But no one ever puts their prices back down, not to the levels they were. Rent for example, it's normally worked out as a % of the value of the home and rises with interest rates to keep up with inflation. it never gets put down when the interest rates do.

[Sladeraptor]

You forgot the absolute biggest factor.
Government printing money like tomorrow wont arrive.

[Snydereriik]

Can you point to a time when this has actually worked? Because I know we’ve tried it before, but my understanding is it doesn’t work

[shiinondogewalker]

they may get inflation under control again, but that doesn't mean prices will go down again. They will in fact keep going up, just more slowly.

[infra]

In reality, altering interest rates has little to no correlation with inflation to the point where making them go up does more harm than good. You are charged a 30% more on your monthly mortgage so you don't have to spend a 3% more on monthly groceries.

Other studies have affirmed that it could even be inflationary, arguing that as higher interest rates also affect the interests of government debt, the government is forced to introduce more than 1T dollars a year into the economy which fuels consumption

[gergo]

This channel is amazing, it’s literally teaching the same things I learn in college

[sleepy_buddah]

that would only deter the rate of inflation and not the prices of items, other than gas these prices aren’t going down

[Djgomdjshw]

Oh so the top 1 percent makes more money while the rest of us struggle and have to work more to make ends meet. So will buy less because our lives a shit and we can't afford anything. Got it..

[yudeok]

When inflation goes down, it's still positive, so the effect is that prices stabilize, not go down. It's a common misconception. Prices of a product/commodity might go down but only if speculation is a significant factor.

[jmackinjersey]

You forgot about the Government Printing money, thus lowering the value of the dollar.

[ApteryxRex]

The problem here is the lag in response, and that businesses tend to keep prices high for as long as possible, so that when the demand and supply approaches equilibrium prices will still be mildly inflated even when coming off peak

[formes]

What this fails to understand about inflation, is ultimately the biggest driver is when the federal government goes "we are going to hand out billions in aid, fire up the money printers" - when you double the money supply, over time, the average cost of items will increase.

While driving interest rates up can slow inflation - ultimately, so long as the money is already in circulation, the inflation will climb.

The real solution here is to accept inflation as a reality of printing money, and rebalance the economy through either re-basing the currency through eliminating money in circulation OR you need to drive minimum wages up such that you pressure the entire economy back into the balance equilibrium.

Of course - those that benefit from the current status quo: The ones who's wealth is climbing at a rate greater than inflation, who tend to be in bed with the decision makers, have no interest in actual solutions to the underlying problems.

[Adultory]

Hes right ! I couldnt afford a loan for some ground beef so i havent had tacos in a week.

[resolutegerm]

In theory that would work, but, seeing as the spending is largely on basic necessities means none of it slows down and we're all fucked.

[bungkusi]

The price won't come down
The US dollar experiencing devaluation caused by massive unwise spending

[SinisterPixel]

Not sure if you realise but gas and groceries aren't exactly something we can slow down on with our rate of spending.

[vayneglory]

You forgot the part where companies are charging more just because they can.

[TheEmanep]

It’s more complicated than ‘mass spending’ and mass demand. A major contributor to inflation has been quantitative easing aka money printing.

[TheCorrupt]

Business have an interest in keeping prices at previously accepted levels.
Shit will stay expensive.