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How is that not coherent? Low interest rates is how governments can keep the pretense that they are not printing money out of thin air and they "service" their
by raducu 6y ago
How is that not coherent?
Low interest rates is how governments can keep the pretense that they are not printing money out of thin air and they "service" their debt and that they will repay it at some point in the future.
- marcosdumay 6y agoIt' not coherent because both printing money and borrowing cause the interest rate to increase. Low interest rates is a reaction from the market to the conditions the government puts on the table, not something that the government sets at will to push an agenda.
- chewz 6y agoYou must have not been paying attention to financial news over last decade. > When the Federal Open Market Committee wishes to reduce interest rates they will increase the supply of money by buying government securities. When additional supply is added and everything else remains constant, the price of borrowed funds – the federal funds rate – falls. https://en.wikipedia.org/wiki/Federal_funds_rate#Explanation_of_federal_funds_rate_decisions https://en.wikipedia.org/wiki/Federal_funds_rate#Explanation...
- marcosdumay 6y agoYes. "When everything else remains constant" here means people choosing to take that extra money and immediately lending it to the government. It's not the government that makes this choice.