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To: IRWIN JAMES FRANKEL who wrote (306)	6/26/2012 5:35:41 PM
From: Chris08	Read Replies (1) \| Respond to of 513

You mean a rate of 1.6% on a 10 year Treasury is too high? What kind of interest rate would you like? 0.5%? Inflation is already as high or higher than the 10 year rate meaning people are lending money to the government for free! One reason the Fed can't get much traction to stimulate the economy is that interest rates are at the "lower bound" (I presume you understand that). As a result QE doesn't have much of an effect. Putting more money into the economy tends merely to fill savings accounts. Businesses have loads of cash they are not investing due to lack of demand. From the Fed Reserve bank of (I forget which one): Given the markets’ limited experience with very low interest rates, it is difficult to predict with any degree of certainty how they will react to them. If the types of disruptions described above turn out to be significant, taking steps to lower short-term interest rates could actually make financial conditions tighter rather than looser and thus hinder the economic recovery. To avoid this outcome, policymakers tend to choose policies that keep market interest rates positive. In other words, the potential for negative interest rates to disrupt financial markets limits the extent to which policymakers can stimulate economic activity by lowering interest rates. This limit is known as the zero lower bound. US rates are already probably too low for the good of the economy. Yield on a 5 year government bond is now 0.72%, less than 1%. Too high for you? That's a NEGATIVE interest rate.

To: IRWIN JAMES FRANKEL who wrote (306)	6/26/2012 6:21:40 PM
From: tom pope	Read Replies (1) \| Respond to of 513

. I am strongly in favor of education - but the limiting factor is NOT the amount of money we spend on it. The limitation is the energy and focus which the student will apply to his/her education. The poor results in education relative to other countries that we are constantly reminded of has very little to do with funding and a lot to do with culture. Not meant to be a profound new insight - just recording my agreement with you IJ. Rates are still too high How could they be any lower?

To: IRWIN JAMES FRANKEL who wrote (306)	6/26/2012 7:10:29 PM
From: Steve Lokness	Read Replies (1) \| Respond to of 513

<<<<< Higher interest rates would be a big mistake IMO. Rates are still too high>>>> I assume you mean the rates controlled by the fed? I would respectfully disagree. If Europe tanks - a very real possibility - the fed is going to need every single measure left in their admittedly diminished arsenal. Of course it doesn't need be Europe - it could be any Black Swan. ..........Those aren't the rates we need worry. It is the undetermined rates that would be acceptable to those who finance our government; China and Japan. They don't have to loan us money AND people seem to be under the misperception that China will continue to loan to us under our terms forever. Huh! If China for whatever reason becomes less willing to fund our government, rates go up. Once rates start to move, they could escalate in a very big way. All IMHO.