The Captain's Journal » Interest Rate Hikes vs. Inflation Rate, by Country

Interest Rate Hikes vs. Inflation Rate, by Country

BY PGF

2 years, 6 months ago

It’s not called the Visual Capitalist for nothing. Go see the charts and graphs.

To understand how interest rates influence inflation, we need to understand how inflation works. Inflation is the result of too much money chasing too few goods. Over the last several months, this has occurred amid a surge in demand and supply chain disruptions worsened by Russia’s invasion of Ukraine.

With inflation rates hitting multi-decade highs in some countries, many central banks have announced interest rate hikes. Below, we show how the inflation rate and policy interest rate have changed for select countries and regions since January 2022. The jurisdictions are ordered from highest to lowest current inflation rate.

Raising interest rates is a fine balancing act. If central banks raise rates too quickly, it’s like slamming the brakes on that car speeding downhill: the economy could come to a standstill. This occurred in the U.S. in the 1980’s when the Federal Reserve, led by Chair Paul Volcker, raised the policy rate to 20%. The economy went into a recession, though the aggressive monetary policy did eventually tame double digit inflation.

However, if rates are raised too slowly, inflation could gather enough momentum that it becomes difficult to stop. The longer high price increases linger, the more future inflation expectations build. This can result in people buying more in anticipation of prices rising further, perpetuating high demand.

Allow me to translate. We always mess this up, which is what we’ll do again this time.

Comments

On June 24, 2022 at 5:44 pm, Georgiaboy61 said:

Much of what the Federal Reserve does is smoke-and-mirrors designed to make them look useful to the markets and beneficial to society as a whole. In reality, they are arguably neither.

As documented in detail by G. Edward Griffin in “The Creature from Jekyll Island” – which is an unauthorized history of the Fed, the Federal Reserve was created in a series of secretive meetings held on Jekyll Island off the coast of Georgia, over the years 1910-1912, by a group of powerful financiers and central bankers. The names involved point to some of the wealthiest families on earth – from the Warburgs to the Morgans.

When the term “bank robber” is mentioned, most people think of a mean looking thug wearing a face mask and holding a gun, but in reality, common criminals with guns are rank amateurs when it comes to fleecing banks. The real pros are the guys with expensive suits, briefcases and larceny on their minds. The best way to rob a bank isn’t to stick it up; it is to own it!

During the administration of Woodrow Wilson, America’s first “fascist president,” the Fed was sold to the public, to the extent that it was debated by Congress at all, by claims that it would prevent damaging boom-and-bust cycles in the economy. In reality, the Fed does not exist to make the lives of ordinary people better; it exists to funnel wealth upwards to the ruling class and the most-wealthy and powerful people on earth.

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning” ~ Henry Ford

Ford was speaking of the manner in which the Fed deliberately engineers boom-and-bust cycles – “business cycles” the banksters intone seriously – and then play the markets to rack in the dough.

Most Americans do not understand that inflation is a form of hidden taxation, or less kindly, theft. Because the Fed can create new money at a whim, they possess the power to mint enormous wealth for themselves and their clients. Whereas the Fed spokespeople say in carefully-crafted press releases that “injecting liquidity into the economy” is both necessary and beneficial, they are telling something less than the whole truth and nothing but the truth.

First, sound money is – and must be – linked to something real of tangible worth which cannot be easily created or counterfeited. Precious metals are the traditional means by which this is accomplished. In such a system wherein gold backs a given currency, as long as the worth of that currency is pegged to gold or some other precious metal, the most-profligate impulses of the ruling class can be curbed and held at least somewhat in check. Politicians are much less likely to engage in reckless spending if it is displayed in the tangible worth of the dollar or other currency, linked to a precious metal.

Franklin D. Roosevelt took the U.S. dollar most of the way off of the gold standard during the 1930s, and Richard M. Nixon finished the job in the early 1970s. Both men did it for the same reason: They wanted to engage in deficit spending and had already used up the existing budget. It is no accident that the U.S. government and most of the West along with it, have gone off the deep end as far as fiscal responsibility is concerned – since the end of the gold standard.
The feds gave themselves a credit card with no upper limit, and it has been one big party since then.

Inflation is extremely destructive of individual and societal finance. Every time the banksters create another $400 million in “new liquidity” (funny money), they dilute the buying power of U.S. dollars already in circulation. The banksters lend this money out to various entities, including the government itself, at market interest rates. Presto – more millionaires and billionaires come into being just like that! Ain’t it grand?!

To get a real idea of just how damaging inflation is, look at the real, i.e., inflation-adjusted, worth of the USD (dolllar) since 1913, and since 1970.
The former being the date the Fed was created and the latter being the time the last links to gold from the USD were severed. Since 1913, the real value of the USD has plunged over 90%, and since 1970, the dollar has lost 70% of its value.

My late father got promoted one year during the 1970s, and finally made enough to afford a Cadillac. He purchased an Eldorado new for around $10,000. Today, roughly half a century on, an Eldorado costs somewhere in the neighborhood of $40,000-45,000 depending on equipment, options and so forth. That’s the destructive power of inflation.

Around that same time, a modest but nice suburban home suited to raising a family could be purchased for less than $20,000 in many locales. Today, the same home costs in excess of $100,000 and in some places, $200-250,000. Again, the destructive effect of inflation upon the worth of the USD.

Where did all that wealth go? The ruling class and the banksters want you to think “Up in smoke,” but the reality is more like into their pockets… given the disappearance of the once-great American middle class and the river of pilfered wealth flowing upward into the coffers of the richest people and organizations on the planet.

Maybe a reader can explain to this simple soul why it is that people who are already billionaires need still more money. Because no matter how much they get, they seem to want more.

The plot thickens, of course, since the globalists have gone all in – and are now trying to seize control of everything and everyone. They want the earth; the whole pie for themselves, the whole enchilada. The world apparently isn’t big-enough for their appetites. No wonder, since many of these folks have more in common with sharks than they do their fellow human beings.

On June 24, 2022 at 10:35 pm, Jonah said:

For the life of me I can’t understand why they lowered interest rates to zero for so long and print money the way they did. Horrible monetary policy that a ninth grader in economics class could spot.

We should have spoon fed our medicine back in 2013 when it was apparent the economy had been reignited.

Now – There are a lot of people that have a lot of money to spend due to this giveaway.
That will take some time to sort out but it will come. It’s already coming. People are loading up credit cards to pay for fuel.

Rinse and repeat.

On June 25, 2022 at 12:25 am, Georgiaboy61 said:

@ Jonah

Re: “For the life of me I can’t understand why they lowered interest rates to zero for so long and print money the way they did. Horrible monetary policy that a ninth grader in economics class could spot.”

The answer is that they – the Fed – don’t work for you or other ordinary people. They work for the ruling class and the richest people and organizations in society.

The answer, too, is that the hubris of these specialists is boundless. They claim that economics is a science and that therefore something as massive and complex as the U.S. economy, or for that matter, the world economy, can be ‘managed’ according to rational principles.

Keynesian and other leftist fantasies masquerading as economic science hold that deficits and inflation no longer matter, which is why these clowns can’t do anything right. They’re premising their policies upon false assumptions that are seductive to humans, but also patently false where reality is concerned.

Last but not least, since many members of the Fed are in league with the globalists, inflation serves their purposes just fine. Classic carrot-and-stick approach, right? Tighten the screws on Joe/Jane Sixpack via a stagflationary economy, crushing debt load, and money creation/inflation on par with Wiemar Germany, and you have a toxic economy which will pound the masses into a more-receptive state of mind for the “Great Reset” they’re planning. They’ll eventually say something like, “We can make things better, but you’ll have to trust us…” and that will be that. The trap will spring shut.

There is a sensible and rationale course of action open to the ruling elites: Default upon the debts which can’t be repaid. Temporary humiliation and opprobrium on the world stage, but a fresh start would be possible with a clean ledger. Living within our means as a nation, something we haven’t done in a very long time.

But the elites won’t accept that outcome, since it would mean diminution or even loss of some of their wealth, power and influence, and just as badly, exposure as the charlatans they are. This they cannot accept, which is one of the reasons why they “need” WWIII and are needlessly provoking Russia to bring it about. In other words, if they have to go down with the ship, they’re planning on dragging everyone along with them.

On June 25, 2022 at 4:26 pm, PGF said:

“Maybe a reader can explain to this simple soul why it is that people who are already billionaires need still more money. Because no matter how much they get, they seem to want more.”

Well, a man with $5 wants five more. So too, a man with 5 million wants 5 million more. But I get your point.

“The plot thickens, of course, since the globalists have gone all in – and are now trying to seize control of everything and everyone. They want the earth; the whole pie for themselves, the whole enchilada. The world apparently isn’t big-enough for their appetites. No wonder, since many of these folks have more in common with sharks than they do their fellow human beings.”

Yep, they want it all.

“The earth is the LORD’S, and the fulness thereof; the world, and they that dwell therein.” – Psalm 24:1

Once a man accumulates enough or sees a path to owning all that is, they get the god complex. And that’s precisely what the oligarchs have. They want God’s throne, as does every man. The oligarchs see the accumulation of things as the way to attain God’s inheritance. Because that’s who they are, that’s how they operate; it fits them. Their plan to merge with machines and live forever is all about that. They want eternal life; in any way they can get it except by entering in through Christ.

“Verily, verily, I say unto you, He that entereth not by the door into the sheepfold, but climbeth up some other way, the same is a thief and a robber.” – John 10:1

They are attempting to steal all that is God’s, as though they created themselves and breathed life into their own souls. They think so highly of themselves that somehow the world and all that dwell therein belong to them.

On June 26, 2022 at 5:52 am, Dan said:

Once again they are wrong. The act of people buying and stocking up does NOT cause inflation….it’s a response to inflation. Inflation is caused by those in power creating TOO MANY DOLLARS resulting in ALL dollars being worth LESS. It’s NOT rocket science.

On June 26, 2022 at 9:19 am, George 1 said:

It is the usual “Take it all down and buy up everything for pennies on the dollar scam.”
This time the PTB are using a much more complex strategy to get it done and doing it on a global scale but it is the same scam.

When the inevitable mega crash, that is in process now, is fully realized, TPTB will force a new currency on us. That currency will be nearly worthless. The usual suspect bankers and other assorted billionaires and others in the “in crowd” will be first get their assets converted in a manner that retains, and probably greatly enhances, their wealth. That is they will steal it from everyone else.

For the average guy. “Oh well says the banksters. Since you are starving and we really care about you we will buy your house for about one percent of it’s worth.” There. See how compassionate they are?

It should be noted that the “banksters” are closely associated with the “neocons.” But that should be self evident.

On June 24, 2022 at 5:44 pm, Georgiaboy61 said:

Much of what the Federal Reserve does is smoke-and-mirrors designed to make them look useful to the markets and beneficial to society as a whole. In reality, they are arguably neither.

As documented in detail by G. Edward Griffin in “The Creature from Jekyll Island” – which is an unauthorized history of the Fed, the Federal Reserve was created in a series of secretive meetings held on Jekyll Island off the coast of Georgia, over the years 1910-1912, by a group of powerful financiers and central bankers. The names involved point to some of the wealthiest families on earth – from the Warburgs to the Morgans.

When the term “bank robber” is mentioned, most people think of a mean looking thug wearing a face mask and holding a gun, but in reality, common criminals with guns are rank amateurs when it comes to fleecing banks. The real pros are the guys with expensive suits, briefcases and larceny on their minds. The best way to rob a bank isn’t to stick it up; it is to own it!

During the administration of Woodrow Wilson, America’s first “fascist president,” the Fed was sold to the public, to the extent that it was debated by Congress at all, by claims that it would prevent damaging boom-and-bust cycles in the economy. In reality, the Fed does not exist to make the lives of ordinary people better; it exists to funnel wealth upwards to the ruling class and the most-wealthy and powerful people on earth.

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning” ~ Henry Ford

Ford was speaking of the manner in which the Fed deliberately engineers boom-and-bust cycles – “business cycles” the banksters intone seriously – and then play the markets to rack in the dough.

Most Americans do not understand that inflation is a form of hidden taxation, or less kindly, theft. Because the Fed can create new money at a whim, they possess the power to mint enormous wealth for themselves and their clients. Whereas the Fed spokespeople say in carefully-crafted press releases that “injecting liquidity into the economy” is both necessary and beneficial, they are telling something less than the whole truth and nothing but the truth.

First, sound money is – and must be – linked to something real of tangible worth which cannot be easily created or counterfeited. Precious metals are the traditional means by which this is accomplished. In such a system wherein gold backs a given currency, as long as the worth of that currency is pegged to gold or some other precious metal, the most-profligate impulses of the ruling class can be curbed and held at least somewhat in check. Politicians are much less likely to engage in reckless spending if it is displayed in the tangible worth of the dollar or other currency, linked to a precious metal.

Franklin D. Roosevelt took the U.S. dollar most of the way off of the gold standard during the 1930s, and Richard M. Nixon finished the job in the early 1970s. Both men did it for the same reason: They wanted to engage in deficit spending and had already used up the existing budget. It is no accident that the U.S. government and most of the West along with it, have gone off the deep end as far as fiscal responsibility is concerned – since the end of the gold standard.
The feds gave themselves a credit card with no upper limit, and it has been one big party since then.

Inflation is extremely destructive of individual and societal finance. Every time the banksters create another $400 million in “new liquidity” (funny money), they dilute the buying power of U.S. dollars already in circulation. The banksters lend this money out to various entities, including the government itself, at market interest rates. Presto – more millionaires and billionaires come into being just like that! Ain’t it grand?!

To get a real idea of just how damaging inflation is, look at the real, i.e., inflation-adjusted, worth of the USD (dolllar) since 1913, and since 1970.
The former being the date the Fed was created and the latter being the time the last links to gold from the USD were severed. Since 1913, the real value of the USD has plunged over 90%, and since 1970, the dollar has lost 70% of its value.

My late father got promoted one year during the 1970s, and finally made enough to afford a Cadillac. He purchased an Eldorado new for around $10,000. Today, roughly half a century on, an Eldorado costs somewhere in the neighborhood of $40,000-45,000 depending on equipment, options and so forth. That’s the destructive power of inflation.

Around that same time, a modest but nice suburban home suited to raising a family could be purchased for less than $20,000 in many locales. Today, the same home costs in excess of $100,000 and in some places, $200-250,000. Again, the destructive effect of inflation upon the worth of the USD.

Where did all that wealth go? The ruling class and the banksters want you to think “Up in smoke,” but the reality is more like into their pockets… given the disappearance of the once-great American middle class and the river of pilfered wealth flowing upward into the coffers of the richest people and organizations on the planet.

Maybe a reader can explain to this simple soul why it is that people who are already billionaires need still more money. Because no matter how much they get, they seem to want more.

The plot thickens, of course, since the globalists have gone all in – and are now trying to seize control of everything and everyone. They want the earth; the whole pie for themselves, the whole enchilada. The world apparently isn’t big-enough for their appetites. No wonder, since many of these folks have more in common with sharks than they do their fellow human beings.
On June 24, 2022 at 10:35 pm, Jonah said:

For the life of me I can’t understand why they lowered interest rates to zero for so long and print money the way they did. Horrible monetary policy that a ninth grader in economics class could spot.

We should have spoon fed our medicine back in 2013 when it was apparent the economy had been reignited.

Now – There are a lot of people that have a lot of money to spend due to this giveaway.
That will take some time to sort out but it will come. It’s already coming. People are loading up credit cards to pay for fuel.

Rinse and repeat.
On June 25, 2022 at 12:25 am, Georgiaboy61 said:

@ Jonah

Re: “For the life of me I can’t understand why they lowered interest rates to zero for so long and print money the way they did. Horrible monetary policy that a ninth grader in economics class could spot.”

The answer is that they – the Fed – don’t work for you or other ordinary people. They work for the ruling class and the richest people and organizations in society.

The answer, too, is that the hubris of these specialists is boundless. They claim that economics is a science and that therefore something as massive and complex as the U.S. economy, or for that matter, the world economy, can be ‘managed’ according to rational principles.

Keynesian and other leftist fantasies masquerading as economic science hold that deficits and inflation no longer matter, which is why these clowns can’t do anything right. They’re premising their policies upon false assumptions that are seductive to humans, but also patently false where reality is concerned.

Last but not least, since many members of the Fed are in league with the globalists, inflation serves their purposes just fine. Classic carrot-and-stick approach, right? Tighten the screws on Joe/Jane Sixpack via a stagflationary economy, crushing debt load, and money creation/inflation on par with Wiemar Germany, and you have a toxic economy which will pound the masses into a more-receptive state of mind for the “Great Reset” they’re planning. They’ll eventually say something like, “We can make things better, but you’ll have to trust us…” and that will be that. The trap will spring shut.

There is a sensible and rationale course of action open to the ruling elites: Default upon the debts which can’t be repaid. Temporary humiliation and opprobrium on the world stage, but a fresh start would be possible with a clean ledger. Living within our means as a nation, something we haven’t done in a very long time.

But the elites won’t accept that outcome, since it would mean diminution or even loss of some of their wealth, power and influence, and just as badly, exposure as the charlatans they are. This they cannot accept, which is one of the reasons why they “need” WWIII and are needlessly provoking Russia to bring it about. In other words, if they have to go down with the ship, they’re planning on dragging everyone along with them.
On June 25, 2022 at 4:26 pm, PGF said:

“Maybe a reader can explain to this simple soul why it is that people who are already billionaires need still more money. Because no matter how much they get, they seem to want more.”

Well, a man with $5 wants five more. So too, a man with 5 million wants 5 million more. But I get your point.

“The plot thickens, of course, since the globalists have gone all in – and are now trying to seize control of everything and everyone. They want the earth; the whole pie for themselves, the whole enchilada. The world apparently isn’t big-enough for their appetites. No wonder, since many of these folks have more in common with sharks than they do their fellow human beings.”

Yep, they want it all.

“The earth is the LORD’S, and the fulness thereof; the world, and they that dwell therein.” – Psalm 24:1

Once a man accumulates enough or sees a path to owning all that is, they get the god complex. And that’s precisely what the oligarchs have. They want God’s throne, as does every man. The oligarchs see the accumulation of things as the way to attain God’s inheritance. Because that’s who they are, that’s how they operate; it fits them. Their plan to merge with machines and live forever is all about that. They want eternal life; in any way they can get it except by entering in through Christ.

“Verily, verily, I say unto you, He that entereth not by the door into the sheepfold, but climbeth up some other way, the same is a thief and a robber.” – John 10:1

They are attempting to steal all that is God’s, as though they created themselves and breathed life into their own souls. They think so highly of themselves that somehow the world and all that dwell therein belong to them.
On June 26, 2022 at 5:52 am, Dan said:

Once again they are wrong. The act of people buying and stocking up does NOT cause inflation….it’s a response to inflation. Inflation is caused by those in power creating TOO MANY DOLLARS resulting in ALL dollars being worth LESS. It’s NOT rocket science.
On June 26, 2022 at 9:19 am, George 1 said:

It is the usual “Take it all down and buy up everything for pennies on the dollar scam.”
This time the PTB are using a much more complex strategy to get it done and doing it on a global scale but it is the same scam.

When the inevitable mega crash, that is in process now, is fully realized, TPTB will force a new currency on us. That currency will be nearly worthless. The usual suspect bankers and other assorted billionaires and others in the “in crowd” will be first get their assets converted in a manner that retains, and probably greatly enhances, their wealth. That is they will steal it from everyone else.

For the average guy. “Oh well says the banksters. Since you are starving and we really care about you we will buy your house for about one percent of it’s worth.” There. See how compassionate they are?

It should be noted that the “banksters” are closely associated with the “neocons.” But that should be self evident.

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Interest Rate Hikes vs. Inflation Rate, by Country

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