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East of Broken Bow | Also, with higher interest rates, things that are financed will cost more. Will it affect the person who locked in their mortgage? Well, probably not until they finance their new car. Then they may have to decide if to go with all the bells and whistles that they wanted, or save a few $$$ somewhere else. That somewhere else, generally is luxury items to start with, but it can turn to other things like do we get a new car every 3 years, or keep this one for 4? Do we remodel this year, or put it off for a while.
Start adding up all those little decisions, and you have a drop in demand of goods, which means you now have less money chasing more goods, lowering inflation. The hard part will be keeping the balance.
Now, when you have policies that encourage MORE spending with more 'free' money, which is also borrowed by the government that is handing it out, it throws a monkey wrench into the normal balance of things, and I have no idea where it will ultimately lead. | |
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Increasing interest rate to stop inflation????
