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rob05c · 3054 days ago · link · · parent · post: Could Higher Interest Rates Lead to Higher Inflation? Explaining ‘Neo-Fisherism’
For some time, I've suspected that zero interest rates for banks, i.e. the wealthy, contributes to inequality. I have no idea how to prove such a hypothesis. (Which makes it the same as every other economic theory, no?) This reasoning has always sounded suspiciously like trickle-down to me. Give cuts to the wealthy (banks), and it'll 'trickle down' to the average consumer. Yes, consumer interest rates are lower...but only because the wealthy's rates are nonexistent.Mainstream macroeconomic models hold that reducing interest rates stimulates borrowing and spending. The increased demand for firms’ products enables them to raise prices. It encourages them to hire more, which enables workers to ask for higher wages.