Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality

Iraq Dinar/News is a popular topic among many topics this board offers. You must log in to see and participate in our Dinar sections.

Position yourself for free after watching the video on eCommerce at www.nenosplace.ipronetwork.com

Neno

I can be reached by phone or text 7am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.
Established in 2006 as a Community of Reality

Many Topics Including The Oldest Dinar Community. Copyright © 2006-2017


Inflation – Deflation – Interest Rates

Share
avatar
Lobo
Moderator
Moderator

Posts : 24874
Thanked : 1203
Join date : 2013-01-12

Inflation – Deflation – Interest Rates

Post by Lobo on Fri 16 Sep 2016, 1:41 pm


QUESTION:
Is there a correlation between the GDP rate and interest rate ?
Best regards,
BL
ANSWER: No. What central bankers fail to take into consideration is that the interest rate is the OPPORTUNITY COST of money as reflected into the future. This is why interest rates naturally decline during a recession because of the future expectation of what money will buy when it returns. If inflation is say 10%, then lenders demand at least that much back plus a profit. Interest rates reflect the inflation rate (opportunity cost of money) plus a profit.
Deflation is when the purchasing value of money rises and tangible assets fall in value. This is also reflected in the drop of interest rates. Often, rates have gone negative for brief periods when people are parking money while expecting it to buy more. They are willing to pay to park their money just to know it will buy more tomorrow.
https://www.armstrongeconomics.com/markets-by-sector/interest-rates/inflation-deflation-interest-rates/

    Current date/time is Thu 22 Jun 2017, 7:10 am