| Gearclash - 5/21/2026 18:31 Money velocity would drop if that were the case. I have a hard time wrapping my head around the results if it were more profitable to park money in a savings account rather than trade that money for something that generates more profit than interest can. The emotional part of me agrees with you, but the amateur economist in me says that won't work.
Money velocity needs to drop. Money velocity and inflation are tied together at the waist.
If real inflation was actually 3% or less, CD rates were 5% and lending rates were 7-8% the economy could function just fine. Returns on investments would actually go up if the cost of money was higher. Right now you have cheap money inflating the cost of everything. You can’t afford to hold dollars so it has to get invested in something, anything to get rid of the dollar that loses value by the minute.
The problem is we’ve had artificially low interest rates for so long the economy is hooked on cheap money like a drug addict on meth.
And just like a drug addict, it takes more drug/cheaper money every time to get the next high.
Edited by Kooiker 5/21/2026 19:50
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Fighting inflation