Mises Wire

A
A
Home | Blog | Credit Crisis: Precursor of Great Inflation

Credit Crisis: Precursor of Great Inflation

February 7, 2008
The so-called "credit crisis" is gaining momentum. Investors increasingly question the solidity of the banking system, as evidenced by banks' tumbling stock prices and rising funding costs. With bank credit supply expected to tighten, the profit outlook for the corporate sector, which has benefited greatly from "easy credit" conditions, deteriorates, pushing firms' market valuations lower. In fact, peoples' optimism has given way to fears of job losses and recession on a global scale. The obsession with a policy of lowering the interest rate is rooted in a deep-seated ideological aversion against the interest rate. It is a destructive ideology, in particular if the government is in charge of the money supply. Because then the government central bank will lower the interest rate to whatever is deemed appropriate from the viewpoint of the government, pressure groups, and vested interest. FULL ARTICLE

Follow Mises Institute

Add Comment