Piffer OT - And Other Assorted Nuts Message Board

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Strategies & Market Trends : Piffer OT - And Other Assorted Nuts

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To: MulhollandDrive who wrote (34996)	5/22/2000 7:52:00 PM
From: Jorj X Mckie	Read Replies (1) of 63513

Think of it this way.... I was recently looking at buying a new home that would cost substantially more than the house that I am currently in. I currently have a 6 3/4% fixed mortgage. Because of interest rates and the market shaving a couple of $$$ from my net worth, I am no longer looking at getting into that more expensive home. Another thing is that when you take out a loan, it creates money that wasn't there before. With low interest rates, you are encouraged to take more loans and therefore create more money. The more money there is, the more that the value is diluted. The more that the value is diluted, the more that it takes to buy the same widget that cost some percentage less when there was less money in the system. So if you have a credit card that has 3.9% interest rate, you might be tempted to carry the debt, however, if it jumps up to 12%, you will probably pay the card off. This removes money from the system and therefore makes the value of the dollar go up. I am sure that if I have made some mistakes in there, somebody will correct me. But I think that I have the gist of it.

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