Quote:
Originally Posted by Larry Siegel
mathjak, please read https://larrysiegeldotorg.files.word...e-policies.pdf
I am not an amateur economist and I am not nuts. Zero or near-zero interest rates are a confiscatory tax on savings; they discourage desperately needed savings; they don't do anything for growth; and they deprive the economy of funds needed for consumption and investment. Larry |
except the flip side is raising rates is a tax on the american public. since 1/2 of all americans have no savings to get interest on and most have very little savings if they manage to save anything as well as have existing debt and plenty of it , low rates puts billions back in to the pockets of americans for spending elsewhere .
every dollar that gets sucked away in interest on a mortgage , a car loan , student debt , credit cards , money costs built in to the prices of goods and services and the gov't debt is a dollar that can't be spent on goods and services elsewhere .
those with savings just had to slide over to bonds to do very well . in fact most folks with money have diversified portfolio's and made up for the low rates on cash instruments with other investments .
higher rates and higher inflation go hand in hand and historically cash instruments have had as many negative return years as positive years .
for the most part higher rates are like the emperors new clothes . you think you are getting something but after inflation and taxes you still got little to nothing .
Americans spent 5.8% of their after-tax income paying interest on mortgages, credit cards, car loans and other debt, according to the latest data from the Bureau of Economic Analysis. That's the smallest share since 1977 and a steep drop from a record high of 9.1% in 2007.
Three-fourths of the interest savings stem from falling rates, the rest from a reduction in debt.
Mortgage interest payments are down 30% from their 2007 peak. Interest payments on other debt, such as credit cards and car loans, are down 50%.
Even if people aren't paying attention to their interest payments falling, the money builds up in their checking account because their bills are less then they otherwise would be at higher rates .
when it comes to economics there are 2 sides to everything .
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