Inflation does not simply return to zero when rates decrease; instead, it follows complex economic dynamics where factors like oil prices and monetary policy decisions (such as the Federal Reserve's rate cuts) interact to create persistent inflationary pressures that don't automatically reverse.
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Why can't prices just chill? 🛢️💸 Dive into the inflation rollercoaster! 🎢 #Economics #InflationHinzugefügt:
Here's how inflation works. Here's, let's look at oil. Okay, we're going to look at oil and I'm going to show you the correlation between oil and how inflation works and we're just going to show you how a lot of people think, okay, inflation's up 8% last year. Oh, that's bad. Now, I can't wait to for it to get back to zero cuz prices will go back to where they were. Don't work that way. Okay, so let's go back. What I did is I went back all the way to 2015 where, you know, basically the inflation numbers were what we kind of normally had. So, if you go back to those times, you can see basically from 2016 to 2020, uh it was about the the consumer inflation, this is the number of kind of one of the numbers that the Fed wants it at 2%. It was there. And the Fed cut, cut, cut. They were cutting, cutting, cutting and they continued to cut rates and keep them low a little too long.
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