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The Price of Money Is Going Up, and It’s Not Only Because of the Fed
What’s the most important price in the global economy? The price of oil? The price of semiconductors? The price of a Big Mac? More important than any of these is the price of money. For more than three decades it was falling. Now it’s going up. Ask most people how the price of money is set, and they’ll say central banks. True, when it comes to direct control of US interest rates, the Federal Reserve calls the shots. But there’s a deeper logic at work. Fundamentally, the price of money—like the price of anything else—reflects the balance of supply and demand. Higher supply of saving pushes rates down. More ... (full story)