Too many questions. Anyway, one of the reasons why there is inflation is that governments want people to spend their money. You need to spend today because tomorrow the prices will be rising. As a result, the economy is very much alive. People are spending now because the prices of the goods and services are constantly increasing.
Deflation is the opposite. That basically means the prices of goods and services are decreasing. This is not preferred by our current financial and economic systems because people might put off purchases because they want to buy goods and services cheaply. As a result, money would circulate less and slow and the economy might not move.
Topic: Deflation - Inflation - Hyper Inflation & Interest Rates Questions? - page 2. (Read 242 times)
November 28, 2020, 09:11:46 PM
November 28, 2020, 09:10:37 PM
Inflation is not a bad thing, when it is maintained as is, that means that the economy is growing, when there is inflation, it helps the production in theory. Zero inflation means that the economy is leading into a deflation which means that there is a lot of production but little demand which will cause work lay-offs and lower wages. I do not have much knowledge about interest but one thing is for sure, if the real estate prices go up because of this, eventually another bubble will burst and it will replicate the 2008 housing crisis in the US.
November 28, 2020, 08:24:18 PM
Hello,
Central Banks monetary policy is to meet inflation rate of lets say 2-3% set by Government fiscal policy right?
Why governments want prices of all the goods and services we pay for to be increased 2-3% yearly in a compounding way?
Why cant inflation be at 0% where prices of goods/services are stable constant throughout time? For this to happen central banks got to stop printing money right?
What is deflation, is it below the above mentioned target rate of 2-3% or below 0% inflation? Is there such thing as negative inflation or is just known as deflation?
Central banks get their statistics/prices of good/services data from past data history right in like a price index of what we pay for stuff to see how high inflation is now? How is this consumer price index is weighted?
The question is do the central banks get this data from essential good/services like food, drink, energy, healthcare, education that we need to survive on or from non essential good/services like holidays, tv's, phones, blenders, PlayStations, cars etc.?
Most non essential goods are from china which is cheap anyway so do central banks derive their current inflation figures from this non essential data that gives a false low below target inflation reading?
Lets look at the essential food items that everybody buys to survive on like bread/milk/eggs etc., since the 2008 crash has these prices steadily gone up to all time high prices now? If that is the case then we can rule out and say there's no deflation right?
Central banks have been printing so much money this year so how do they claim current inflation is below target? Doesn't make any sense.
Okay questions on interest rates:
- Looking at past charts high inflation is correlated high interest rates? Central banks say high interest rates are a sign of a good economy however why is there high inflation in a good economy when central banks don't print a lot of money in this correlated times? In this time there's less debt, savers get rewarded so what causes high inflation to make prices to sky high in this correlated time?
- Central banks say low interest rates are signs of a bad economy and they lower interest rates to get everybody borrowing cheap money at low rates to buy things that suppose to stimulate the economy higher so how this low interest rates is correlated to low inflation rates were having now when central banks are printing a lot of money in this correlated times? In this time theres more debt, debtors get rewarded so what causes low inflation to stop prices going sky high in this correlated time?
- Will low interest rates cause real estate property prices to continue going higher because it attracts a lot of buyers to cheap mortgages at low rates that increases demand pushing prices up and vice versa when interest rates rise? Real estate was cheap back in the 80's 90's but interest rates were high back then at like 15-19% not like 2-3% were getting today.
- If interest rates go negative then that means the borrower gets paid interest right?
- Is it possible to get times that makes economic sense where there is high interest & low inflation correlated and also low interest & high inflation correlated or does it always has to be not making sense that is high interest=high inflation and also low interest = low inflation cycles that we always go through?
Central Banks monetary policy is to meet inflation rate of lets say 2-3% set by Government fiscal policy right?
Why governments want prices of all the goods and services we pay for to be increased 2-3% yearly in a compounding way?
Why cant inflation be at 0% where prices of goods/services are stable constant throughout time? For this to happen central banks got to stop printing money right?
What is deflation, is it below the above mentioned target rate of 2-3% or below 0% inflation? Is there such thing as negative inflation or is just known as deflation?
Central banks get their statistics/prices of good/services data from past data history right in like a price index of what we pay for stuff to see how high inflation is now? How is this consumer price index is weighted?
The question is do the central banks get this data from essential good/services like food, drink, energy, healthcare, education that we need to survive on or from non essential good/services like holidays, tv's, phones, blenders, PlayStations, cars etc.?
Most non essential goods are from china which is cheap anyway so do central banks derive their current inflation figures from this non essential data that gives a false low below target inflation reading?
Lets look at the essential food items that everybody buys to survive on like bread/milk/eggs etc., since the 2008 crash has these prices steadily gone up to all time high prices now? If that is the case then we can rule out and say there's no deflation right?
Central banks have been printing so much money this year so how do they claim current inflation is below target? Doesn't make any sense.
Okay questions on interest rates:
- Looking at past charts high inflation is correlated high interest rates? Central banks say high interest rates are a sign of a good economy however why is there high inflation in a good economy when central banks don't print a lot of money in this correlated times? In this time there's less debt, savers get rewarded so what causes high inflation to make prices to sky high in this correlated time?
- Central banks say low interest rates are signs of a bad economy and they lower interest rates to get everybody borrowing cheap money at low rates to buy things that suppose to stimulate the economy higher so how this low interest rates is correlated to low inflation rates were having now when central banks are printing a lot of money in this correlated times? In this time theres more debt, debtors get rewarded so what causes low inflation to stop prices going sky high in this correlated time?
- Will low interest rates cause real estate property prices to continue going higher because it attracts a lot of buyers to cheap mortgages at low rates that increases demand pushing prices up and vice versa when interest rates rise? Real estate was cheap back in the 80's 90's but interest rates were high back then at like 15-19% not like 2-3% were getting today.
- If interest rates go negative then that means the borrower gets paid interest right?
- Is it possible to get times that makes economic sense where there is high interest & low inflation correlated and also low interest & high inflation correlated or does it always has to be not making sense that is high interest=high inflation and also low interest = low inflation cycles that we always go through?
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