Wednesday, July 6, 2016

Stefan Ingves chatted about interest rate announcement – Sveriges Radio

Martin: Hello! For several years the Riksbank attempts (and the ECB) to raise inflation through measures that will mainly benefit businesses. That is, it becomes cheaper for companies to borrow money, to invest and to offer more goods and services while the population’s purchasing power is more or less the same. Consequence: Companies need to lower their prices in order to sell their excess supply. – & Gt; Inflation goes down Inflation means that prices are rising, but when the vendors can raise their price? When the mass runs into the shopping malls and queuing to buy something. And when will the masses running into shopping malls? When they have more purchasing power. – & Gt; Inflation goes up Today, we in Europe and in Sweden asymmetrical fiscal policy measures (good for business, but neutral for the population or purchasing power) that do not reach the inflation targets. What do you think of measures to raise the population’s purchasing power? For example. The Riksbank can open up to people and offering 0% -loan for all, especially for consumers (Governor as online direct banking). And to avoid injuries through increased indebtedness, the Riksbank can postpone repayment requirements until inflation has reduced the real debt by 50%, ie that people lend their good money today, driving up inflation through increased consumption and repays much later with cheap inflationary money. It is clear that private banks do not like this idea, but it is therefore even more important to talk about it ;-) Thank you very much for your answer in advance! Sincerely, Martin

Stefan Ingves:
Everything in your question has to do with the same thing, a central bank, the Riksbank can always somehow create more money. When we do get it, sooner or later, more money in the economy than you want. When you buy goods instead, that prices are rising. There will be inflation. How it works always while the road from more money to inflation may look slightly different depending on the circumstances.

14:37, 6 July 2016

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