Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: koan who wrote (78456)	4/29/2008 7:13:11 AM
From: Dan3	Read Replies (2) of 116555

Re: No economic model in the world goes against that equation With the notable exception of the one used by the geniuses running the FED. We pay people to borrow money and then are shocked, shocked, that the investments they make don't seem to make sense. Negative real rates are not a good thing. That the FED put them in place when the economy was not wallowing in slack was a very bad thing to do. Actual savers (as opposed to the wildcatting speculators that dominate this board) receive negative returns. Is it any wonder that money managers have taken to emulating drunken casino players? It's the only way to not show a negative real return. The worst thing about a negative real interest rate is the it behavior it forces. If the FED really wants to help the economy vs. enriching political cronies, it should be paying savers 6% (2% real rates) and offer homeowners mortgages and (limited) credit cards at 5%. If visa needs to charge 29% interest rates plus huge fees to maintain its business model then visa needs to go away.

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