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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (45560)	1/31/2006 2:18:49 PM
From: Elroy Jetson	Respond to of 116555

Excess money creation pushes down interest rates. Lower interest rates creates a pattern of lower savings and higher borrowing. Yet Monetarists claim to find this reduction in the percentage of GDP saved to be a mystery. It certainly couldn't be because savers are being offered rates well below inflation, could it? CD rates, and rates in general, have climbed as the Fed turns off the money creation tap. Yet this means real estate prices collapse, which can only be "fixed" by turning the money taps back on - driving interest rates down again. .