Investment masterclass: ‘Money is basically a fiction’
Money Clinic with Claer Barrett
00:00
Is Inflation Good for Anyone?
The idea is that by raising interest rates, it makes borrowing money more expensive. And when it's more expensive to do something, you're less likely to do it. So the volume of money creation has gone negative, which means inflation will come down. But there is a complication - people become aware of inflation and start asking for pay rises. This feeds through into an 'inflationary spiral', which central bankers don't like. If your earnings go up in line with inflation, but your debt stays the same, then it becomes easier for you to pay that debt off later on.
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