Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (137064)	9/9/2013 2:05:28 PM
From: RetiredNow	Read Replies (1) \| Respond to of 149317

ZIRP is good for the individual American, but that's just the benefit. Every policy action has a benefit and a cost. The benefit of ZIRP to the individual is that it lowers mortgage rates. The cost is that it causes home prices to rise, so it gets hard as time goes by to get into a home. Another cost is that it creates inflation in many goods in the economy, which means the value of the dollar isn't what it used to be. We've seen that in commodities like oil and gas, as well as food staples like chicken. So the trillion dollar question is do the benefits outweigh the costs? At the macro level, economists have done this calculation and they are now saying that the rise in GDP is now lower than the rise in debt and decrease in the value of the dollar. This essentially means that stimulus now has a negative multiplier effect, instead of a positive one. In other words, the benefits from the stimulus from QE and ZIRP and deficit spending is no longer worth the costs.