Season 1 · Episode 417
Could stubborn central banks drive us to debt deflation?
There was need to raise interest rates, says Steve. Now there’s a danger they will stay too high for too long, leaving us with increased debt and less money to pay for it.
Debunking Economics - the podcast · Steve Keen & Phil Dobbie
August 21, 202435m 26s
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Show Notes
The last time interest rates were this high they came down rather fast. This time central bankers are determined to manage a slow unwind and deliver a return to growth without wreaking havoc on the economy. Will they be successful? This week Steve Keen argues the high interest rates are inflicting damage without treating the problem. Inflation is being caused by businesses increasing their mark-ups. But, Phil asks, surely they are only able to do that because demand is outstripping supply. And what should interest rates return to? Central bakers call it the R* - is there a danger if they assume it’s too high we could drive ourselves towards debt deflation?
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