Galapagos Islands Message Board

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Strategies & Market Trends : Galapagos Islands

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To: zonder who wrote (40088)	5/19/2003 10:16:12 AM
From: GraceZ	Read Replies (1) of 57110

the deeply negative interest rate is a perverse inventive to move into riskier assets and not lose money after inflation. Bingo. Its designed to get people out of safe and to engage risk. Perversely people seem to be content to sit on huge sums at .7% interest nominal, money is still piling up in money market funds. They are resolving their need for income by bidding up the bonds, a strategy which has to blow up at some point. Unfortunately this is what comes of trying to use monetary policy to the exclusion of fiscal policy. It is fiscal policy which sets up the conditions for real growth in the economy.

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