![Can High Rates Stoke Inflation? Ask $3 Trillion](https://i0.wp.com/heisenbergreport.com/wp-content/uploads/2024/06/GreenDollarBalloonJune2024.png?fit=1152%2C654&ssl=1)
Can High Rates Stoke Inflation? Ask $3 Trillion
Somehow, it's still controversial to suggest that rate hikes, and particularly the persistence of Fed funds at peak rates in the US, is fueling spending, prolonging the US expansion and, at least at the margins, putting a floor under consumer price growth.
To be clear, higher income households have a lower marginal propensity to consume, and it's generally higher income households who hold interest-bearing assets. Notwithstanding the apocryphal grandmothers and uncles the Fed "robbed" of saving
Construction in the 1980s showed me that that is absolutely the case.
Poorer customers wanted repairs and to somehow extend until times got better Or they got their tax refund.
Country club set were upgrading on whims and gave me the sense that they were somehow being charitable to me and my workers. Paying with money market checks. The whole trickle down economy notion was over martinis at country clubs.
Trickled down economy is the ultimate wasp nonsense.
We truly have a K-shaped economy. High rates help the upper half and hurt the lower half, low rates have the potential to help the entire economy. So the people in the lower half have to be thinking, “thanks for that fiscal stimulus money….and then, I really did not appreciate you allowing it to be “inflated away”.”