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nonasiandoctor OP t1_iuiej3f wrote

Reply to comment by Substantial-Acadia-1 in The terminal rate does not need to go above inflation. by nonasiandoctor

The interest rate and inflation rate are related. But there is no magic saying that inflation only comes down when the interest rate is above the inflation rate.

There are many contributing factors to current inflation. Energy, the war in Ukraine, the m2 supply. If you were to overnight fix the supply chain issues we would see inflation drop. Part of inflation is too much money chasing too few goods. If magically you doubled the number of goods available ( real productivity increase) then inflation would subside somewhat.

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MyBrilliantReality t1_iuju9id wrote

I’m a little slow… but if too much money chasing too few goods leads to inflation, wouldn’t less money chasing the same few goods also reduce inflation?

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