I feel kinda dumb for asking this... but I'm actually clueless. The inflation on these interest rates, how can that relate to the inflation of produce or is it entirely unrelated?
Quote from: DAS B00T x2 on January 16, 2015, 07:26:38 PMI feel kinda dumb for asking this... but I'm actually clueless. The inflation on these interest rates, how can that relate to the inflation of produce or is it entirely unrelated?Woah woah woah, slow down buddy. Inflation is an economy-wide increase in the price level, there isn't an inflation 'on' interest rates.
Quote from: Meta Cognition on January 16, 2015, 07:28:20 PMQuote from: DAS B00T x2 on January 16, 2015, 07:26:38 PMI feel kinda dumb for asking this... but I'm actually clueless. The inflation on these interest rates, how can that relate to the inflation of produce or is it entirely unrelated?Woah woah woah, slow down buddy. Inflation is an economy-wide increase in the price level, there isn't an inflation 'on' interest rates.Okay.And... like... I can't mentally bridge the gap between macro and micro economics.
Quote from: DAS B00T x2 on January 16, 2015, 07:33:15 PMQuote from: Meta Cognition on January 16, 2015, 07:28:20 PMQuote from: DAS B00T x2 on January 16, 2015, 07:26:38 PMI feel kinda dumb for asking this... but I'm actually clueless. The inflation on these interest rates, how can that relate to the inflation of produce or is it entirely unrelated?Woah woah woah, slow down buddy. Inflation is an economy-wide increase in the price level, there isn't an inflation 'on' interest rates.Okay.And... like... I can't mentally bridge the gap between macro and micro economics.When the Federal Reserve talks about raising or lowering interest rates, they're talking about the fed funds rate--a very specific interest rate to do with interbank trading.
And a higher rate means more growth, right?
Quote from: DAS B00T x2 on January 16, 2015, 07:40:50 PMAnd a higher rate means more growth, right?If you want to look at economic growth, you really need to look at nGDP. Interest rates are seen (incorrectly, in my opinion) as 'indicators' of policy which can be used to secure proper growth. For instance, after the stock market crash of 1987, the Fed lowered interest rates in order to keep banks trading and stop it affecting the real economy. However, in times of prosperity it's not unusual for the Fed to raise interest rates to curb lending and stop the economy from 'overheating'.