Quote:
Originally Posted by CoachKandSportsguy
So why was money so cheap for so long? Because when inflation gets very low, there is the threat of deflation, and the deflationary spiral is much more difficult to manage than the inflation spiral.
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Sportsguy, I usually concur with your opinions on these matters, but not on this one.
Money became cheap after the self inflicted housing market crash in 07/08. During that crisis, it became necessary for the government to step in and utilize the tools in their tool bag to stimulate the economy during a difficult time. Unfortunately, short term thinking politicians learned a dangerous lesson when the stimulus quickly turned the economy around. The lesson was that cheap money makes voters happy and gets them easily re-elected. Dam the long term consequences, keep the cheap money flowing and pop another bottle of Dom Perignon. Ultimately, that short sightedness created an economy which became addicted to cheap money and unsustainable debt. Now here we are with out of control inflation and dangerous debt because of many years of irresponsible and unnecessary cheap money, paying the price for shortsighted rather than long term thinking.