Inflation, Mortgages and the Insurance Market
In almost all areas of the world central banks have pumped billions of dollars into the economy. The vast fall in credit market liquidity and the resulting economic downturn forced central banks to abandon monetary policy techniques that appeared to work so well over the previous ten years. In desperation central banks resorted to the age old trick of printing money, the impact of which has been twofold.
Firstly, an increased level of cash in the economy has helped to ease credit market tension and promote economic recovery. Secondly, simple monetary economics tells us that there will be a resulting burst of inflation (quantity theory of money). Read full article…