Why are US Savings Bonds interest rates low? (bond, invest, loan)

[robertpasa]

Is the idea, to discourage people from buying them so they will buy other things?

My folks bought me a bond in the early 90s. The interest rate was very high. It keeps me from dumpster diving now.

[mathjak107]

Because the economy sucks! unemployment is high ! people are in debt up to there eyeballs.

low interest rates and cheap money act as oil to a machine in those circumstances.

[bUU]

The bonds are effectively the loaning of money to the American people, and just like you want the the lowest interest rate on your car loan or mortgage, the American people intend to pay the lowest interest rate for which there are folks willing to loan the government money at that rate.

[bmw335xi]

Originally Posted by robertpasa

Is the idea, to discourage people from buying them so they will buy other things?

My folks bought me a bond in the early 90s. The interest rate was very high. It keeps me from dumpster diving now.

To spur growth, the best thing the government can do is to keep interest rates low. This encourages business to use this time to expand. This encourages people to buy and invest in real estate. This encourages people to buy a new car. ETC

[robertpasa]

But why were interest rates so high in 1993?

[mathjak107]

We were no where in the shape we are now.

[Cameron60]

Originally Posted by robertpasa

But why were interest rates so high in 1993?

if interest rates were much higher the US may not be able to pay the interest on the $17 trillion dollar national debt.
Today there was an interest rate move on the 10 year.
The market can force rates up.

[bUU]

Originally Posted by robertpasa

But why were interest rates so high in 1993?

Because at that time too few people would have been willing to buy the bonds at such low rates.

[mathjak107]

it also goes by what rates are in other countries who compete for investment dollars. world rates are low all over in developed countries. not so back in the 1990's.

[Bideshi]

Originally Posted by robertpasa

Is the idea, to discourage people from buying them so they will buy other things?

You're on to them! Yes, they want to force everybody into the stock market so they can grab it all. They haven't had a good haul since 2008.