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In fact, the problem has been that rates aren't low enough, they are united by the zero lower bound. The natural interest rate would be several points in the ne
by rquantz 11y ago
In fact, the problem has been that rates aren't low enough, they are united by the zero lower bound. The natural interest rate would be several points in the negative.
- pdq 11y agoIn what universe could interest rates ever be negative and considered "natural"? Or even a zero interest rate being considered "natural". If you believe that to be true, what rational entity would take the risk of loaning out money to either lose money or get back solely their principal at some future time? And considering prices are inflating, this makes zero and negative interest rates even worse. Market interest rates reward the savers by risking their capital and loaning it to borrowers who can put that capital to work and pay back the lender both principal and interest.
- rquantz 11y agoSorry, autocorrect. That was supposed to be limited by the zero lower bound. You can't get below zero (or not much below anyway).