"Everytime I hear the name Volker I think 21% interest rates."
Yep! And every time I hear the name Bernake, I think of an insolvent banking system, and failing stock markets (along with historically low interest rates).
In related news, I read that the Bank of England yesterday lowered interest rates to their lowest level in 350 years.
Amazing, and what a strange world! Low interest rates are usually a sign of healthy economies, ones experiencing low inflation, healthy growth, and modest-to-high savings rates. This time around, and while we have low inflation/interest rates, we also have bankrupt or nearly bankrupt banks, and almost no lending activity, and monetary easing (money printing).
One would think that if there is greater risk in lending during a recession/depression, rates would be historically high to reflect that increased risk, not low as we are experiencing.
But I'm not a central banker, nor a trained macro economist, so what do I know! |
