Uhm, no. A higher interest rate makes borrowing money cost more. It's a deterrent to borrowing. Just like when you want a loan but the high interest rate makes you think twice.
Um, YES! Every deficit dollar spent by the US Government is borrowed and has to be repaid with interest. The higher the rate, the more money it takes to service that debt. High interest rates sure ain't making the biggest money borrower in the world, the US Government, to think twice about deficit spending. 35 trillion and counting.
You're referring to interest owed on debt. I'm talking about the expansion of money supply through borrowing which is really just printing money based on bonds, or as Greenspan used to spin it, "quantitative easing." Expansion of the money supply devalues the dollar, and higher interest rates stave inflation by deterring this kind of borrowing.
Higher interest rates are generally a policy response to rising inflation.
And yet, the higher the interest rate, the more money the guv owes to service that debt - which in turn, raises guv spending - causing more inflation. 35 trillion and counting. Raising the interest rates has never slowed government deficit (borrowed money) spending.
The government borrowing and spending money is what causes inflation so higher interest rates DO add to the inflation equation.
Uhm, no. A higher interest rate makes borrowing money cost more. It's a deterrent to borrowing. Just like when you want a loan but the high interest rate makes you think twice.
Um, YES! Every deficit dollar spent by the US Government is borrowed and has to be repaid with interest. The higher the rate, the more money it takes to service that debt. High interest rates sure ain't making the biggest money borrower in the world, the US Government, to think twice about deficit spending. 35 trillion and counting.
You're referring to interest owed on debt. I'm talking about the expansion of money supply through borrowing which is really just printing money based on bonds, or as Greenspan used to spin it, "quantitative easing." Expansion of the money supply devalues the dollar, and higher interest rates stave inflation by deterring this kind of borrowing.
https://www.investopedia.com/ask/answers/12/inflation-interest-rate-relationship.asp
And yet, the higher the interest rate, the more money the guv owes to service that debt - which in turn, raises guv spending - causing more inflation. 35 trillion and counting. Raising the interest rates has never slowed government deficit (borrowed money) spending.