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>> 0% interest rate for several years is not healthy > That's not healthy or unhealthy. It's just a thing. I agree with you generally, but this response is a l
by wutbrodo 11y ago
>> 0% interest rate for several years is not healthy
> That's not healthy or unhealthy. It's just a thing.
I agree with you generally, but this response is a little silly. What does "it's just a thing" even mean? Given that there's no ironclad economic consensus on this question yet, it's more comfortable to not spend too much time sitting on the ZLB. Now that doesn't suggest anything specific about what costs should be incurred to get away from the ZLB[1], but all else held equal, it's not unreasonable to suggest that staying near zero for so long is a bit more uncomfortable than having a bit of a buffer to lower rates.
[1]i.e., I'm not taking the oft-heard position that we need to do what it takes to raise rates NOW before it's too late
- deleted 11y ago[deleted]
- jusben1369 11y agoThere's this general sentiment that it should be between 1-3%. But it's just a sentiment mostly based on historical experience. But the global economy is constantly evolving; China wasn't really even a blip on the radar 15-20 years ago. So whose to say what the right level is except the one that is attempting to balance inflation and employment goals.
- wutbrodo 11y agoThe advantage is much more fundamental. Given the uncertainty that you're describing, removing a constraint on our actions is ceterus paribus a good thing. The same argument could have been made during the Bush years, when rates were kept low "unnecessarily" (according to conventional thinking), and the inability to lower rates after the crash tied our hands unnecessarily.