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by hikingsimulator
1355 days ago
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> Lowering tax is inflationary It's not. At least not per se. Lowering taxes for the wealthiest does not impact the basket of goods that generally composes the inflation index. Markets reacted badly because the British debt and currency, despite covid and brexit, are still risk havens and worth holding for hedging one's positions. were. The Kwarteng budget upended this picture, the long term solvency and ability to deal with the future of the UK government. Financiers readjusted their models and positions accordingly. |
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That depends on what they do with it. For example, in my country rent and house prices are a part of the CPI, and if wealthy people decide to invest their tax cut gains in real estate, that will raise those prices.
Of course, you can debate how large the effect of lower taxes/stimulus checks is on the current inflation event. Personally I believe that the current situation is mostly caused by supply-side problems, and that demand-side measures will have only a limited effect.