Monday, April 20, 2009
Inflation Not Anticipated
More and more commentators are asking the question that has been bothering me for a few weeks now. Given the risk that the large US fiscal deficit will lead to an increase in the supply of money (as opposed to greater domestic or international borrowing or higher taxes as a way of funding expenditure), why does it appear that the market does not anticipate high rates of inflation in the future?
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Do you think the increase in the fixed rate by two of our banks indicate that they are anticipating an higher inflation rates?
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