I don't know anyone who wants to pay higher prices. People want lower prices.
Expected inflation is 2.35%? Isn't that too low?
- Thread starter timothylee
- Start date
The Federal Reserve wants people to pay higher prices. That is why they charge the entire world interest on their money, in other words, inflation. So they can make more money.
This must be a new record. 3 major misperceptions and outright errors of thought in 3 short sentences. I can't imagine how one could possibly show more disregard for and lack of knowledge how the financial system works than this.
Then explain inflation in terms that a small child might understand it, or a dog. Why is less purchasing power for a citizen a good thing?
So can I infer from your statements that when the Fed held interest rates near zero from first quarter 2020 to first quarter 2022 they had no desire to make money, then raised rates based on a sudden desire to make money and have the public pay higher prices?
You actually have more purchasing power when prices decrease or stay flat ignoring for a moment the source of funding because product and service pricing is always more elastic than wage pricing. Regarding funds it depends on whether you earn credit interest or pay debit interest (fixed income investments vs loans). The central bank is neither interested in earning money nor in wanting people to pay higher prices. Their rightly so mandate is to manage stable price increases around 2% (in the case of the Fed) and a healthy employment level. With runaway inflation you lose everything other than sitting on hard assets, which is why every central bank is interested in combating inflation. A healthy financial market is one where you earn a fair interest rate commensurate with the amount of risk you take by investing in fixed income assets. The zero interest environment is highly unhealthy and hurts especially those who depend on fixed income investments which is pretty much anyone regarding pension investments. Central Bank benchmark rates are a tool to manage investing and inflation not the target.
But when someone wears tinfoil hats then all sort of factual information just flies by such person because they already made up their mind about the evil of centralized money management.
But when someone wears tinfoil hats then all sort of factual information just flies by such person because they already made up their mind about the evil of centralized money management.
"...You actually have more purchasing power when prices decrease or stay flat..."
When the purchasing power of the dollar goes down, prices of goods do not go down. It is the opposite.
The central bank wants people to pay higher prices, otherwise their inflation target would be zero. This way people can afford to buy shit. But since they charge regional banks (and the government) interest on the money that is borrowed to pay for shit they cannot afford to buy but buy anyway, the central banks makes more money in receivables than it lent out. This the private central bankers make money.
When you are swimming in wealth, you can take a break from fleecing the world for a time.
These predictions are worthless. In 2021 they were calling for zero rate hikes this year.
The fact is that nobody knows how inflation will behave under our current social & political economy and monetary configuration. At the very least, there are strong reasons to be skeptical that still-negative real yields will be sufficient to bring it down.