Originally Posted by
Willie Nelson
It may seem like an aside but hear me out. I listened to an interesting discussion on "The Money" the other day:
https://www.abc.net.au/radionational...times/14090348
This discussed central banks worldwide dropping historically low inflation targets of old such as the 2-3% band of the RBA in part, because policymakers are working against them (monetary policy versus fiscal stimulus) with ever increasing spending and in part, becase it leaves no lever left to pull when interest rates go to zero as they did. Governments are now also looking for inflation to cure the debt problem, which it can do to a large degree.
Actually, that is probably the most important statement on here to date - it is time % chasers start understanding 'The Game'.
Higher inflation reduces the real value of the government’s outstanding debt while increasing the tax burden on capital investment due to lack of inflation indexing. Increasing the current annual inflation target regime from 2 percent to 3 percent inflation reduces debt while lowering GDP.
Read the Penn Wharton University of Pennsylvania's full report here: https://budgetmodel.wharton.upenn.ed...overnment-debt
In short, any newly signed EBA that DOES NOT include the term "CPI + (X)%" is the equivalent of longterm Financial Suicide - don't believe me, save this thread and lets review it in 5 years time 