> For example, one of the
> economic "true-isms" that I've never grokked is why the central
> bankers/ accountant types always say "high interest rates reduce
> inflation, low interest rates may cause inflation" - I've always
> thought of it the other way around. Any takers on this one?
>
Government and the banking mafia print money, that is, they
'inflate' the 'money supply' and so prices go up. The whole
process can be referred to as 'inflation'.
When all prices go up, people usually say there's 'inflation'
and they are usually right, although they don't know the reason
for the higher prices.
So you have two related meanings for the word 'inflation'. A
more technical one which includes the cause for higher prices,
and a more 'vulgar' def. according to which 'inflation' just
means higher prices.
"high interest rates reduce inflation"
So, what's meant by 'inflation' there? Just higher prices. And
yes, the assertion is backwards. What really happens is this :
The banking mafia prints money out of thin air. Since they have
more (fake/counterfeited) money to lend, they lower interest
rates. Fake 'capital' is more abundant, so because of
demand/supply, the 'price' of capital (interest) goes down.
And so, printing money has two different effects. It makes fake
credit cheaper AND it causes prices of other goods and
services to go up, in part because people are now spending the
new money they got as credit.
"low interest rates may cause inflation"
Causation is backwards. Inflation of the money supply leads to
'low', SUBSIDIZED interest rates.
