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A serious consequence of these rates and unlinking the dollar is inflation. It's why a "normal" house these days costs $250k-$300k is most metro areas. It's why daycare costs $2,000/month. It's why a new Corolla is $20,000.
It really hurts the poor and middle class as they have little room to bargain for higher wages. It primarily helps the upper and wealthy classes as their investments were bought at much lower prices and allows for the payoff of debt at inflated incomes and they typically own businesses that can raise prices and give themselves a pay raise.
Big coincidence that inflation has skyrocketed since we came off the gold standard in the early 70’s, huh? The Fed can endlessly print and print money... fiat currency isn’t worth jack.
You don’t get it, do you? The central banks are all-in for Modern Monetary Theory. MMT advocates unlimited debt to finance anything. And what is the best interest rate for nations signed up for unlimited debt? Yes, that would be zero or even negative.
Now do you get it?
No mainstream economist is in favor of MMT, at least in part because MMT has never been articulated in a coherent set of mathematical expressions and models that can be tested using techniques of modern econometrics.
There is no way to know what a model of MMT supports or doesn't support because there are no coherent mathematical models. There are plenty of words in tweets and blog posts which are vague and sometimes self-contradictory.
That's not economic science. That campaign sloganeering. There is a difference.
Even progressive left-wing economist Paul Krugman said MMT supporters:
Quote:
“tend to be unclear about what exactly their differences with conventional views are, and also have a strong habit of dismissing out of hand any attempt to make sense of what they’re saying."
US Central Bank has raised interest rates nine times over three years. This does not seem compatible with a primary directive of zero or negative interest rates.
Economists use effective interest rate models that account for inflation and money supply growth in a given economy. For the U.S. economy the fed funds rate in a 2%-3% range is essentially a zero effective rate.
Sheesh...my elderly mom on leased land...lease expires next year. May finally be able to get a loan (or reverse mortgage) and keep her in her place without moving which would be great!
What incentive is there for capital to lend at a negative rate? Why would capital PAY to invest? Makes more sense to keep money in a safe.
That's the point of it...the government wants to essentially coherence corporations into investing the money instead, since they're gonna lose money on it just sitting there.
Instead of enacting pro growth policies, which would fix the problem but oh no we can't cut taxes and give people more of their money to spend.
Big coincidence that inflation has skyrocketed since we came off the gold standard in the early 70’s, huh? The Fed can endlessly print and print money... fiat currency isn’t worth jack.
Dude what on earth are you talking about? You're finding patterns in noise to chase your conclusion.
Inflation rate was much more volatile while on gold standard, including periods of inflation much higher than than after US came off the gold standard. The past 35 years have been the longest period of low, stable inflation in history.
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