Do Low Interest Rates Lead to Inflation?
Inflation may be one of the oldest monetary concerns in history. Going back at least as far as the Roman Empire, inflation took hold when the emperors sought to increase the money supply by mixing precious metals with cheaper ones and passing them off as being of similar value. However, then as now the market eventually comes to reflect the actual value of the money in question, and the original unit of currency becomes debased. The result is lower purchasing power–e.g. what once cost $2 now costs $4. If the debasement of currency continues, the potential is there for a monetary situation mirroring that of the 1920s in the Wiemar Republic, when wheelbarrows of notes were required to buy basic goods.
