With the popular view being government priming the pump with stimulus dollars to get the money moving again failing once again, should we try another alternative to coax money out of liquidable assets, dollar hedges and international investments? If interest rates were increased, I believe that business loans would become a more attractive asset to banks and domestic bonds would be sought by foreign investors. If there is indeed 2 trillion dollars of capital holdings amongst corporations, there must be something done to coax those dollars out. This benefit must outweigh the potential risk of insolvency that is still in the minds of leaders of businesses that skimmed through the last credit crunch with lean capital plans. Currently, safe investments pay dreadful returns and bring the burden of ill liquidity. I haven't completely thought it through, but to me, it seems like it should work. Cheap capital now only seems to serve the "haves" and not the "have nots" that want to take the risk to have.
My personal belief is that interest rates are too low. But, no, government or the fed should not increase them. They should get out of the way and let the market set the interest rates. Interest rates are prices just like any other determined by the market.
I think absolutely...yes. The extremely wealthy need MORE so, I say, raise 'em on up! Oh and....Down with minimum wage! Tax cuts for the rich! (this message was sponsored by your local chapter of the RNC).
Everything hurts the little guy the most. That's just capitalism..as defined by corporate interests. That would be stock holders, and profit takers, CEO's and the like. The little guy is always left holding the bag. It just makes "good business sense". Greed is good. More is good. Even more is even better.
Incorrect, sir. Free market capitalism is best for the little guy. Sure it's good for the big guy too, and every guy in between. but let's face it, the big guy has always done ok throughout history. It's only free market capitalism that has allowed everyone to succeed.
The only reason interest rates of the fed are almost zero is because the banks want to make more off their interest rates to the consumer. They buy low and sell high. The lower the interest for banks to borrow, the more money they make on the taxpayer. They are also trying to discourage people from buying US bonds, in hopes they will invest in more risky investments like hedgefunds and gold. CD rates at the banks are also at it's lowest levels because they want people to take their money out of the banks and spend it foolishly or on other investments like a house. Dispite what people think, a home loan is still high at 5 to 6%, because after 30 years you still end up paying two time what the house sold for. Why end up paying $300,000 for a house that sells today at $150,000. Homes are so cheap in the USA you can get a good one for under $70K, if you pay cash, you have the best investment ever. It can be a income machine and after 30 years, you would have made 4x the amount you paid, and when you sell it, you can unload it for as low as $70K. The broadcast propaganda only shows the down side of homes and forclosures, and broke people. But they don't show you that there are a lot of smart investors buying up these bargains and flipping them for rent. And the cheap ones are paid and owned full cash. Hence, all profit and no interest for renting. But back to the issue. Yes they should raise intrest, people are not borrowing anyway, and those banks need to pay more for their free government cheese money. Hence more revenue for the USA fed and more strenght of the USD across the globe. Without the higher interest rate, the USA is just a turd waiting to go bust. The USD has been declining world wide since 2001, and the rest of the world knows it. But Americans are to dumb to see it.
No it's not tickle down. Or trickle anything. It's every voluntary trade makes both parties better off.
But they're our biggest trade partner, are they not? Does that mean we're not free either? What does that make us?
well in context it appeared you meant america. I guess we have to start over. who are the profit takers? and are you sure their biggest trading partner is "china"?
Wall street, not main street, is where I was aiming. They take the profit. The ultra elite. Main street main be somewhat invested in Wall street, but, that's mostly smoke and mirrors. China owns the US, literally and figuratively. I would suggest the profit takers and those that sold us to China are one in the same. Who is that exactly? Big money....scattered across the world. Certainly NOT any "we" I associate with.
I don't think it matters all that much in the grand scheme of things. Interest rates high, mortgages and debts payments go through the roof and kill the country. If Interest rates low, country continues to go throgh stagflation and still kill the country. The only solution is to allow the debt to liquidate and to create a pro-business friendly environment in which I don't have to spend thousands of dollars in taxes and permits if I just wanted to start a taxi service for example. You know it's too much regulation when you need a permit to run a backyard lemonade stand.
Since interest on real capital is already set by the market, I assume you are speaking of interest on money. The fact is that money is not capital, so money should not earn interest. Take all the money in a nation and burn it, the nation will not be any poorer. Paying interest on money is harmful to the economy and makes inflation a certainty. Real capital depreciates, but without inflation, money (unlike real capital) does not depreciate. This would, in the absence of inflation, make money a superior form of savings, and without money supply inflation, investment in real capital would completely dry up. Wherever interest is paid on money, inflation must accompany the arrangement in order to nullify the interest. Some people have put forth the idea of issuing money with a serial number. After a period of time, a few years, that serial number would be voided out, rendering that particular piece of money worthless. They say that money should behave like other forms of capital, like a beef steak, you buy it, and if you don’t use it, it will rot. Such an arrangement would eliminate the necessity of constant money supply inflation, as well as restoring real productive capital as the preferred form of capital investment.
