deegeese , 2 months ago Government lends money to banks. Banks lend money to homeowners. When inflation is too high, the government charges banks higher interest, so banks charge customers higher interest. Fewer people take out loans, so there is less cash circulating in the economy, which dampens inflation. At least that’s how it’s supposed to work.
Government lends money to banks. Banks lend money to homeowners.
When inflation is too high, the government charges banks higher interest, so banks charge customers higher interest.
Fewer people take out loans, so there is less cash circulating in the economy, which dampens inflation.
At least that’s how it’s supposed to work.