I’m curious, does anyone know what happens to interest rates in hyperinflation times?
Suppose before the inflation the bank savings rate was 5% per year, and the borrowing rate was 6%. What happens to those numbers?
The problem is that the banks don't want to lend money because they don't want to take on the risk of default since that risk is higher than normal in this economy, and the payoff (i.e. rates) so low. Fix the economy, and everything else will fall into place. And the only role the government can play in that is to remove the uncertainty, put a set of favorable rules firmly in place for the next 20 years, and then get their own financial house in order. Every dollar in deficit spending is a dollar of value that is stolen from the future of this country.
Im curious, does anyone know what happens to interest rates in hyperinflation times?
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This wasn’t exactly a case of hyperinflation but back in the Carter era (or rather ‘error’) the daily interest rate on the money market that we had parked money in reached an astonishing 17%. As I recall that was abut the high water mark but for quite a while the rate of return was well into the teens.