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Inflation & Interest Rates - Don't Worry

Governments and bankers turn to economists and thinkers to control inflation and interest rates but to no avail. 

It seems impossible to divine the driver in the world economy and government reaction times are far too slow.  Over the longer term, interest rates have usually been about 2% more than inflation but with fluctuations.

Whilst this relationship remains, inflation hardly matters to citizens with viable businesses or jobs, assets or property and modest borrowings; it would only matter if there were deflation, which occurred in the distant past but is a frightening prospect since it is an unknown. 

Inflation causes everything to go up in price but not value, not only food and essentials but also assets such as property.  This results in demands for higher salaries which are buying less, so the merry-go-round goes on.  Assets go up in monetary value but the poor cash investor who ultimately backs mortgages loses out with a loss in the value of their savings.

The beauty of a free economy is that it will be self-correcting given time!


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