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To: Bid Buster who wrote (275547)	1/29/2004 10:20:22 AM
From: zonder	Read Replies (3) \| Respond to of 436258

I tend to think money supply is the root cause of inflation, not rates Who said interest rates were "the root cause" of inflation? A couple of people have said higher rates are deflationary but wouldn't a higher cost of borrowing be inflationary in itself? No. This is textbook Econ 101. Higher cost of borrowing leads to lower borrowing (by individuals and corporations) and lower liquidity (gov can sell more bonds etc). If you believe (as you said above) that "money supply is the root cause of inflation", you have to agree that increasing interest rates lead to lowered inflation expectations.