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"Have We Reached The Breaking Point?", page-78

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slange

10,438 Posts.

4055

13/09/15

14:37

Post #: 15983082
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Originally posted by timber1956 ↑

"What you propose is pure linear thinking"

I don't see a problem with that.

Lateral thinking can be helpful where there is a process of exploration for unknown factors. But in the relationship between rising interest rates an inflationary pressure, there is no such uncertainty.

In a world of limited resources, increased expenses (interest bills) have to be funded. The savings required to meet those increased expenses can only come by decreasing consumption and investment. Decreased consumption and investment leaves a supply overhang that pushes down prices. Falling prices is, by definition, not inflationary.

In this case, linear thinking gives the right answer (which unfortunately is not the one you want).

Nice try. No cigar!

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You are of course wrong because you would appear to be failing to consider that the economy can grow faster than interest rates rise.
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0 Great analysis

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