Obviously its not ideal but neither is a stagnant economy. When that money is invested in ways that spur economic growth then the interest rates will naturally find their way back to palatable levels.
Yeah, not being able to build up interest is frustrating but not being able to save because you don't have income to begin with is worse, IMO.
You guys advocating inflation as a good thing to "force people to take risky investments with their savings to stay even with inflation to stimulate the economy and create jobs" crack me up. High inflation WILL lead to high interest rates. It is absolutely inevitable. That should be the last thing you kids should want.
Well no CC. Who "wants" inflation at all much less high inflation? You're framing this in a vacuum acting as though we have a choice other than a sandwich and a glass of piss. All we're saying is that it would be stupid to make sitting on your money a more attractive option right now when that is exactly what people are doing.
CC doesn't give because he's sitting pretty, while Ms of Americans are sitting in , and sinking deeper.
It's not people sitting on their money that is the problem, it's the artificially low fed funds rate (essentially zero) and the spread between that and treasury yields. The mega banks can make money with essentially ZERO risk and the Fed government can keep up their spending crack habit by "borrowing" the money back from the banks that the fed loaned them. Why would the banks want to loan that money to REAL people with REAL risks?
No, really. If you sit on your money, then it's your fault.
Don't get me wrong. I wish we wouldn't be in a ty economic period, and everybody had a job, and we would be coveted so we didn't need to risk it to outpace inflation. But that's not where we are now.
I strongly resent that statement but should expect it from an idiot like you.
I care deeply about what happens to this country and this economy.
All you want to do is cry and whine about how ed we are and how hopeless everything is.
Not advocating it's a good thing. Merely accepting it's just what happens in a ty economy.
Only "has to happen" if you start printing trillions of dollars out of thin air.
It *is* people sitting on their money. And if you offer an 8% yield on treasuries, that's where the money is going to go anyways, which also means supporting the spending crack habit.
Well, we owe much of that money. Tell me how we cut spending AND solve the job problem all in one and you'll probably get your Nobel prize too.
Randy Wray: Helicopter Ben – How Modern Money Theory Responds to Hyperinflation Hyperventilators
In this final part of the series I will address the belief that the US (and other countries with large budget deficits in their own floating rate currency) faces hyperinflation. Many fear that “Helicopter Ben” (Chairman Bernanke) has pumped so much “money” into the economy that high inflation, if not hyperinflation, will be the inevitable result. This is one of the reasons for the run into gold—supposedly an inflation hedge.
In reality, there is no surer bet than the wager that the US will not experience significant inflation for many years to come.
http://www.nakedcapitalism.com/2011/...+capitalism%29
I know quite a few people who are buying up gold.
You aren't getting it. It is the politicization of the fed and the artificially low fed fund rate that is the principal problem. The fed is technically "non government"...they can create dollars, loan it to banks at essentially 0%, who then turn around and loan it to the government at 1.5%. It's totally risk free and starving the market for private job creating capital.
But banks will loan to you too (gladly at an interest rate well above 1.5%) if you're willing to take the risk. Nobody is biting though. Lack of credit isn't the problem. The problem is that the jobs are being created in Asia, not in America.
No, that was the left over of the Carter era. Inflation and interest rates lowered once Reagan policies were put in place.
"Inflation and interest rates lowered once Reagan policies were put in place."
St Ronnie the leftist didn't do . Volcker managed the interest rates to beat inflation.
No, that was Reagan's first year as president. He walked in January 20. If you told me it took him 6 months, ok.. but a whole year is a different story.
You think a president can direct congress into policy that fast?
First of all, Carters fiscal year budget was in place till the end of September 1981. It still took time to convince congress into his policy ideas. I don't recall anything really started changing till about 1983.
It was Paul Volkner's decision to raise first interest rates and then suddenly lower interest rates not Carter or Reagan..
I don't recall the details than many years ago, but the president still generally sets policy decisions.
Sure. It only took 5 months for Bush Jr to implement his tax cuts.
Took Barry 1 month to get his stimulus through.
I would argue that the first year is actually when they can more rapidly implement what they want, seeing they have the momentum from winning the election.
You don't need to apologize for Reagan though.
So? Interest rates and inflation have nothing to do with the budget.
Try again.
It really is the Fed that makes monetary policy decisions.
Volkner was nominated by Carter too. He was the chairman until 1987.
Reagan reappointed him in 1983.
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