Survivor
08-02-2008, 12:56 PM
Nearly all bankers and many governments have held that the way to fight inflation is to raise interest rates.
This would be an effective curb if, in our type of slow moving inflation, people acted as they are supposed to do in a
theoretical economist's traditional concept of inflation or as they do act in a faster moving inflation.
Then businessmen, consumers, and speculators would all compete to stock up on things they do not need now but believe will cost more later.
This would raise prices faster and faster until so many became so overstocked and overbought that the boom would burst.
[OIL] Inflation hedges. Come around and smack you senseless.
In other words, cutting your nose off despite your face. Raise the cost of raw materials, finished products, or services and that is of course inflationary.
It not only raises the cost of products directly affected, but by raising the cost for still other businesses who buy these products or services, it forces price increases.
But raise the cost cost of money, say the central bankers, and this is deflationary. Confused? so is Bernake.
This would be an effective curb if, in our type of slow moving inflation, people acted as they are supposed to do in a
theoretical economist's traditional concept of inflation or as they do act in a faster moving inflation.
Then businessmen, consumers, and speculators would all compete to stock up on things they do not need now but believe will cost more later.
This would raise prices faster and faster until so many became so overstocked and overbought that the boom would burst.
[OIL] Inflation hedges. Come around and smack you senseless.
In other words, cutting your nose off despite your face. Raise the cost of raw materials, finished products, or services and that is of course inflationary.
It not only raises the cost of products directly affected, but by raising the cost for still other businesses who buy these products or services, it forces price increases.
But raise the cost cost of money, say the central bankers, and this is deflationary. Confused? so is Bernake.