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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (36091)	8/6/2002 3:44:10 PM
From: Bilow	Respond to of 281500

Hi CobaltBlue; Re 6% interest rates and mortgages. Back then we were on a gold standard. There was no long term inflation from 1800 to 1940. That 6% interest rate would be hellaciously expensive when you add on the inflation premium. Inflation over the past 30 years (more or less one economic cycle) amounts to an average (compounded) of 5% per year. Adding that much into the 6% interest rates gives 11%. In other words, even absent the usury charges, it's unlikely that a lot of people would have been eager to borrow money much above 6% back then. -- Carl P.S. CPI index series: research.stlouisfed.org