Yeah the markets run on fumes though. If the fed publishes a rate hike, people start running to their investments to 'protect' them. Almost like a verifiable rumor. It has a highly emotional component,
As you pointed out, the interest rates should be higher than inflation so that people are committed to saving money, otherwise one is stoking inflation, because people see that buying stuff as soon as possible, no matter what the cost, is better than leaving it in the bank to burn. If people spend all their income buying stuff on the day they get it to avoid the price-hikes, then you have a problem not dissimilar from Weimar.
Yeah the markets run on fumes though. If the fed publishes a rate hike, people start running to their investments to 'protect' them. Almost like a verifiable rumor. It has a highly emotional component,
As you pointed out, the interest rates should be higher than inflation so that people are committed to saving money, otherwise one is stoking inflation, because people see that buying stuff as soon as possible, no matter what the cost, is better than leaving it in the bank to burn. If people spend all their income buying stuff on the day they get it to avoid the price-hikes, then you have a problem not dissimilar from Weimar.