An indirect result of FiatMoney?.
- Central bank lends money at artificially low interest rate, to `stimulate the economy'.
- Borrowers borrow money, put it into circulation by buying stuff.
- Central banker notices prices of consumer goods beginning to rise, increases its interest rate.
- Market interest rate increases. More money is saved (because it earns higher interest); less is borrowed (because it costs more).
- Businesses that depend on getting more capital go bust when the supply dries up.
- EconomicDownTurn.
CategoryEconomics