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To: Sam who wrote (8217)3/6/1999 11:10:00 AM
From: MikeM54321  Respond to of 9980
 
"Why WOULDN'T someone borrow money at that rate? Then go out and buy/make some Yahoo?<g> Who gets to actually do that? Surely not individuals. It doesn't compute."

Sam,
I believe it's the overnight lending rate they are referring to. Bank to Bank, is just about at zero. Not consumer loans.

In answer to your second question, I believe Ramsey brought that one up about a year ago. Borrowing some money over there and investing here. Someone punched out the numbers (Lawrence I think?), using at that time, the currency exchange numbers (and added risk involved) and it turned out, lo and behold, there is no such thing as a free lunch! It was an interesting exercise.
MikeM(From Florida)



To: Sam who wrote (8217)3/6/1999 5:00:00 PM
From: Frodo Baxter  Respond to of 9980
 
>I can't say that I understand interest rates at 0%. Why WOULDN'T someone borrow money at that rate? Then go out and buy/make some Yahoo?<g> Who gets to actually do that? Surely not individuals. It doesn't compute.

You can't borrow money if your banks are kaput. The money goes into the banking system, they play the yield curve, and eventually, they'll recapitalize themselves as this kabuki dance plays out.

Surely you're familiar with our own banking crisis in the early 90s.


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