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You are mixing up interest rates and government debt yields. Interest rates are set artificially by the Fed. Because they are set almost at zero, this causes r
by jazzyk 11y ago
You are mixing up interest rates and government debt yields.
Interest rates are set artificially by the Fed. Because they are set almost at zero, this causes run on government debt as the only "safe" source of interest income, lowering yields thus making it inexpensive for the government to acquire even more debt.
The result (in the US) is skyrocketing government debt
(from 64% of GDP in 2008 to 103% in 2015)
We. Are. So. Fucked.
- smitherfield 11y agoGovernment debt yields are a nearly 1 to 1 function of the interest rate, assuming there's confidence in the currency and the government's ability to tax and print money.
- hollerith 11y agoYou mean "nearly the identity function". A 1-to-1 function is something different (((namely, a function f such that whenever f(a) = f(b), a = b))).
- smitherfield 11y ago1-to-1 correlation, I meant to say. Anyway, I think my meaning was obvious.