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

To: TimF who wrote (262786)	4/28/2008 12:00:36 PM
From: c.hinton	Read Replies (1) \| Respond to of 281500

Tim people determine how much they can afford in monthly payments and ajust the amount to meet that ability those payments remain the same for the term of the loan... Over that time people enter their high earning years.... People are give inflation ajusted wage hikes... Their monthly payments remain the same. Relatively speaking they earn more while the loan repayments stay fixed. re. interest rates...of corse low inflation expectations lead to low rates....and the effect is direct. ps i will gradually post the various points that may be infered from the two papers..... the first and most obvious is to ask is why did the fed write the papers.

To: TimF who wrote (262786)	4/28/2008 12:16:56 PM
From: c.hinton	Read Replies (1) \| Respond to of 281500

Tim ,inflation expectation is different from inflation . what people expect in the future determines the cost of long term loans. also you have left out the risk factor in new lending...banks are given money cheaply now by the fed... but are they passing on the savings? NO! they are rebuilding their earnings by charging higher rates and only to low risk borrowers.

To: TimF who wrote (262786)	4/29/2008 3:38:18 PM
From: c.hinton	Read Replies (1) \| Respond to of 281500

"In finance and economics nominal interest rate or nominal rate of interest refers to the rate of interest before adjustment for inflation (in contrast with the real interest rate); or, for interest rates "as stated" without adjustment for the full effect of compounding (also referred to as the nominal annual rate). An interest rate is called nominal if the frequency of compounding (e.g. a month) is not identical to the basic time unit (normally a year)."wiki