$BTC e $XRP
Low interest rates and inflation
When interest rates are low, borrowing money becomes cheaper. This encourages:
People to spend more: They buy more houses, cars, cell phones and other items, because loans and financing have smaller installments.
Companies to invest more: They hire employees, open new stores or increase production, because loans for these initiatives cost less.
With more money circulating, the demand for products increases (more people want to buy). When this happens, sellers realize that they can increase prices, because customers are willing to pay.
Imagine that you have a snack bar and sell hamburgers for R$10. Suddenly, everyone starts getting cheap loans and has more money in their pockets. Your customers start buying more hamburgers. But you can't produce enough to meet demand.
What do you do? You increase the price to R$12, because you know that customers can pay. This is inflation.
Summary
Low interest rates make people and companies spend more.
More spending increases demand for products.
High demand can cause prices to rise, generating inflation.
Investments in banks, because they are safe, increase.
And risky investments such as cryptocurrencies decrease due to their common volatility, which causes their value to fall.
Low interest rates and inflation
When interest rates are low, borrowing money becomes cheaper. This encourages:
People to spend more: They buy more houses, cars, cell phones and other items, because loans and financing have smaller installments.
Companies to invest more: They hire employees, open new stores or increase production, because loans for these initiatives cost less.
With more money circulating, the demand for products increases (more people want to buy). When this happens, sellers realize that they can increase prices, because customers are willing to pay.
Imagine that you have a snack bar and sell hamburgers for R$10. Suddenly, everyone starts getting cheap loans and has more money in their pockets. Your customers start buying more hamburgers. But you can't produce enough to meet demand.
What do you do? You increase the price to R$12, because you know that customers can pay. This is inflation.
Summary
Low interest rates make people and companies spend more.
More spending increases demand for products.
High demand can cause prices to rise, generating inflation.
Investments in banks, because they are safe, increase.
And risky investments such as cryptocurrencies decrease due to their common volatility, which causes their value to fall.