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Quite astonishing

The likes of Ruchir Sharma might wish the era of cheap money to be over. After all, their organisations exist to assist the ever upward flow of wealth in society, and high real interest rates greatly aid this process. The reality us, however, that falling interest rates are going to happen in 2023 and with inflation disappearing rates are likely to tumble in 2024. I doubt they will go below 1% again, but with deflation likely rates of well below 2% are very likely, and even essential.

How anyone can start shouting about high interest rates when real rates are currently, in sterling, perhaps minus 8%, is astonishing. And then to go on and say that 2% in a time of deflation would be low interest rates is alarming. Because of course that would be a positive real rate of interest.

Spud is trying to do interest rate analysis without distinguishing between real and nominal interest rates. That’s so stupid that it’s alarming even from him.

7 thoughts on “Quite astonishing”

  1. You fltter Murphy by suggesting that he is tryingto do analysis. He is simply trying to find a peg upon which to hang his demand that savings are effectively confiscated, following Lenin’s advice of crushing them between the upper and nether millstones of taxation and inflation.

  2. Inflation is going to disappear next year is it? I must check my stock of bridges for sale. I’m sure I have one in his size.

  3. Money should be cheap. After all, it’d be a bit of a bugger if the actual value of the item of exchange is more than the denomination on it.

    See also: Making Money by the Usual Suspect (not cpl. N.Nobbs)

  4. Martin Near The M25

    I’m reminded of Monty Python and Dennis Moore. “He steals from the poor to give to the rich. Stupid bitch!” How do people transfer wealth from the poor? If they had wealth they wouldn’t be poor.

    I’m not betting on the “transitory” inflation disappearing next year either.

    Just reread Going Postal, Making Money next I think.

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