So, You think you understand more about inflation , am I right ? Well, could you pls tell me what it means by inflation ? What can cause inflation ?
My understanding is inflation is caused by unblance of supply and demand to one extreme, and to the other extreme , it can cause deflation. So, to control inflation, you have other ways besides rate hike, and which will hurt the working people seriously, that is , people live on pay checks by pay checks. The purpose of inflation control is to prevent the increase of price of products. By rate hike , your price goes up immediately, i.e your mortgage payment will go up ( if you buy a new house or you have a adjustable loan),
by hiking the rate, the cost for companies to do business or modernizing the factories , which will improve productivity, and reduce cost, will be increased, and which will discourage companies to modernize their factories, as a result productivity reduced, and
that will fuel inflation. With rate hike, the cost to produce the food you eat everyday will increase, because farmers pay more interest to buy fertilizer, farming equipments..etc, and with rate hike, people still need to eat, so the demand will not reduce as a result, while the cost to produce is increased. Do you think by hiking the rate , people will not buy cars anymore if they need ? NO !!!! So, your monthly payment will be increased, and that is inflationary. Their are many many examples I can show you rate hike only fuel inflation and discourage companies to reinvestment on productivity . Do you know why we have a low inflation recently ? Because , people like to spend , and companies, one after one , reported higher earning , and companies have money to expand their capacity of production, which will improve efficiency and productivity, as a result the cost was reduced, and that is why you still can enjoy low inflation . What is the rate hike caused a depression, and companies can not sell their products, and as a result no revenue to continue expand and improve productivities ? then , the companies have to shrink , resize, that means lay off, millions of American working people will lose their pay checks , serious family and social problems will follow, and the tax revenues
will be reduced significantly, of course , at the same time Government will pay a lot of people on wearfares, then deficit for the government and compete with companies for money, and as a chain reaction , rate will continue to hike without end, that what happened in 1980 under Carter administration.
Well, you think about it !!!!!!! WITH YOUR BRAIN !!!!!! |
