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To: robert b furman who wrote (12671)1/2/2013 4:42:33 PM
From: Return to Sender  Respond to of 13403
 
OT: >When the US's debt to GDP as a ratio reaches parity, does the Fed's interest rate get manipulated down as happened in 1945,after WW II ?<

en.wikipedia.org

US debt generally rises in times of war. A rise in GDP will always help lower debt if sufficient taxation is there on the dollars being made. But interest rates are already artificially low. How much lower can they go?

The problem we have now Bob that we did not have in 1945 is entitlements. If we are only taking in $1 for every $6 being paid out (heard it on CNBC today) how can we continue Medicare and Social Security paying out the benefits that we are doing now?

en.wikipedia.org


We cannot.

RtS



To: robert b furman who wrote (12671)1/2/2013 10:56:37 PM
From: Woody_Nickels  Read Replies (1) | Respond to of 13403
 
Are negative interest rates possible?
Rates are already essentially zero on Fed funds.

This is how Japan was caught/stagnant for the past 20+ yrs.
They couldn't raise rates without their market tanking, and
they couldn't lower rates to stimulate their economy.

That's the "magic" of ZERO rates. :p

Woody


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