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You Can't Solve Inflation With Inflation

Ron Paul laying the smack down on our masters..I mean the Fed.
Kruposays...

Lowering interest rates destroys people?

It's the real, not nominal, interest rate that affects how much your savings are earning - which should, hopefully, be the risk-free rate of return.

There's more thought that needs to go into this, but it's late and I'm tired.

FishBulbsays...

I'm no economist, but increasing the interest rate controls inflation. Lowering it when inflation poses a possible problem leaves you open to inflation getting out of control.

Kruposays...

You're talking about the nominal interest rate. The real interest rate is the difference between inflation and the nominal interest rate.

In theory there shouldn't be a big disconnect between the two... I'm just wondering if Ron Paul went as far as this page, though? http://en.wikipedia.org/wiki/Inflation

Maybe he's a Monetarist, though...

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