Quote:
Originally Posted by mapuc
I had to make a search to learn why a higher interest rate is the best tool against high inflation.
Throughout my life I have heard this so many times-Increase interest rates to fight a high inflation...but until now I have never given it a thought.
"When the interest rate is high, the supply for money is less, and hence inflation decreases, which means supply is decreased. In contrast, when the interest rate is decreased or low, the supply of money will be more, and as a result, inflation increases, which means that demand is increased."
But...we have had years with negative interest and the inflation was low-so why now what have triggered the increase of the inflation?
Markus
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There are several definitions for "inflation", and some of them were designed with rightout criminal intention, I say: to deceive the people while they are being plundered. People often have confused understandings of what the term really means, the most common definition nowadays is that we have inflation when the prices go up. This associates a certain causal link that works only one way, not the other or both ways, and that is what makes this definition wrong.
You hit a very, very important question there, and so I took some time to make the following photos from two books I have, since I know you understand German. This way it was the easiest way to get this text over, the OCR thing (ands using DeepL for translation) I just did not get to work.
The first is from the book "Österreichische Schule für Anleger. Austrian Investing zwischen Inflation und Deflation" von Rahim Taghizadegan, Ronald Stöferle und Mark Vale, Finanzbuch Verlag
2014.
Click on them.
