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Why INTEREST RATE HIKES Are INFLATIONARY!

Interest-Rates / Inflation Nov 24, 2022 - 07:02 PM GMT

By: Nadeem_Walayat

Interest-Rates

Unfortunately I will have to leave this mostly for next time. But basically INTEREST RATE HIKES to bring INFLATION DOWN! Is NOT going to work because INTEREST RATES DO NOT CONTROL the RATE of INFLATION. So that which academics have built their whole careers on is BS! All I hear is Volcker raised rates that brought inflation down and so rinse and repeat, was it Interest rates that killed the Inflation of the 1970's? Are you sure your not lapping up the propaganda which is ECONOMICs perpetuated by the propaganda arms of Governments called central banks who's primary remit is to put up a smoke screen of misinformation so as to allow governments, to get away with printing money!

As I have voiced for well over a decade, Inflation is a function of governments PRINTING MONEY, of which QE is part of the equation i.e print money to monetize government debt, which despite all of the noise continues to this very day! Governments printing money on an epic scale for which the smoking gun is the Governments deficit spending, the US Federal Government is spending $1.4 trillion more than it earns in revenue that is PRINTING MONEY! For the UK it's about £120 billion,


What do you think interest rates hikes are going to do to the money printing? Reduce or increase money printing? Think about it!

Interest rate hikes mean that the INTEREST payments on DEBT INCREASE, so how is the government gong to fund this extra expense? PRINT MORE MONEY! Which means UPWARDS pressure on INFLATION! What's worse is that 1/4 of UK debt is INDEX LINKED! That has already seen debt servicing costs soar from £5 billion a month to £20 billion PER MONTH!

So the inflation train continues to chug along all whilst the government and central banks play their smoke and mirrors game.

This article is an excerpt form my recent analysis on the current state of the embryonic bull market Stock Market Cool as a Cucumber Despite Earnings and Fed Noise that was was first made available to patrons who support my work.So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.

Also access to my extensive analysis that concludes in detailed stock market trend forecast into the end of 2023 Stocks Bear Market Max PAIN - Trend Forecast Analysis to Dec 2023 - Part1

Recent analysis includes -

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By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2022 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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