Wighead said:
Mr Khan said:
Good on them to not try to strangle growth with a higher interest rate, though i fail to see where inflation is a problem anywhere in the West right now.
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People are still having a hard time paying their bill on time, so inflation would be really really bad in that situation since it would mean more people filing for bankruptcy.
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No, inflation would be good. Inflation is good for debtors and bad for creditors (although sticky wages for low-end workers means inflation is usually moot unless the government is more responsive on the minimum wage). If i bought a house in 1984 on a 30-year-mortgage for 45,000, that is *much* easier to pay off in the last 5 years than it was in the first, and that benefit is all mine and to the detriment of the bank, as the money they're getting today carries a good deal less weight than money they got in the late 80s, but the bank can't just go "we want that back in "real" dollars."
Deflation is what's bad for debtors, when prices drop and wages summarily drop, and dollars become heavier, because suddenly your debt is worth more, not less.
Fighting inflation in a down market is a foolish pursuit, like the nutters in European Parliaments and US Congress who keep shouting for austerity thinking that Zimbabwe is just around the corner, when what the market needs most right now is inflationary pressure, more money down in the lower strata of the economy (unlike QE that pumps it at the top, where it just chases the next wall street bubble) stimulating actual economic activity.