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No they're not. The very purpose in keeping interest rates low is to stimulate borrowing. What other purpose do low interest rates serve?
You're still comparing apples to oranges. If you think that stuffing money into savings accounts due to increasing interest rates is going to stimulate the economy, I can't really help you much. That line of thinking is WAY, WAY off base.
I didn't realize there was any money to stuff into savings accounts, relative to the amount of debt the consumer has. Heck, I'd say that 90% of Americans are underwater in regards to assets to debt if you figure in each person's share of the national debt.
The national debt is not debt. Its the money supply in a credit based money system. It cannot be paid pack anymore than we can remove every dollar from circulation. Government debt is the entire basis for the money system.
What ever the low interest rate may do or not do for housing is not really relevant to the issue that it is still a huge subsidy, specifically for the banking system. Its cheap money for banks to loan. Another way to prop up housing, other than what is essentially bank induced inflation, is to have across the board tax cuts.
Why many Americans prefer bank debt at interest rather than free government credit is a product of ignorance related to having no understanding of our credit money system. Low interest rates debase our currency with profit to banks. Low taxes debase our currency with the proceeds going to the tax payer.
Essentially the point of fact that to be in favor of low interest rates is to take a pro inflationary position since that is essentially what we are talking about. Inflation needs to prop up the current housing contracts. If that is the case, why not just cause inflation by lack of taxation? Low interest rates is a banking system giveaway.
I didn't realize there was any money to stuff into savings accounts, relative to the amount of debt the consumer has. Heck, I'd say that 90% of Americans are underwater in regards to assets to debt if you figure in each person's share of the national debt.
Hi TexianPatriot,
All that debt is usually is stuffed right back into the banking system as deposits. Most people who borrow money, spend it. That money is received by the seller who typically deposits it.
Taking on debt and raising interest rates are two completely different topics.
Raising interest rates will kill any glimmer of hope for stabilization in the housing market. It will raise the cost of capital for businesses. It will kill commercial real estate even more than what is about to happen. I could go on, but raising rates is a TERRIBLE idea.
Hi 8 SNAKE,
It would be just fine if they lowered taxes and ballooned the deficit. We would have the same relative amount of money in circulation in the form of hard cash to tax payers rather than new money created as a debt to a bank which is what the low interest rate is designed to encourage. If it is the only glimmer of hope for you then you would be a banker.
I'm a little torn here. I don't think the answer is raising interest rates but I do see both sides of the coin. The housing market is still out of control in most places with regards to being overpriced. This is very confusing for most to understand because it "seems" like there are deals everywhere.
Wages are not going up and housing is not affordable for most people. If they do buy a house and "stretch it" if anything goes wrong they won't be able to pay for it. Which was a HUGE part of what got us into this mess in the first place. With home prices still being high in most places, people would have to stretch it to get into the home. The government is trying to push that but it is a bad idea.
We have to get away from this mentality, and the only way for that to happen is if the housing market comes down to reality levels. How it gets there is the difficult part.
Then that puts you in the "doesn't understand our monetary system" category. Yep.
To cheer for bank-owned financial servitude (low interest-rate cheerleading), either in lieu of or against the option of government created and managed debt (i.e. no banking agency involved in the process of creating money=debt=credit), is to root for your own financial dispossession. wiki fractional reserve banking, video google "Debt as Money" et al, these are good starting points to understand our monetary system and why banks are in it to win it, and you (we) are the pawn.
I could create my own printing press at home and debase the currency, but that lands me in jail. A bank does it and it's par for the course. Wake up.
I'm a little torn here. I don't think the answer is raising interest rates but I do see both sides of the coin. The housing market is still out of control in most places with regards to being overpriced. This is very confusing for most to understand because it "seems" like there are deals everywhere.
Wages are not going up and housing is not affordable for most people. If they do buy a house and "stretch it" if anything goes wrong they won't be able to pay for it. Which was a HUGE part of what got us into this mess in the first place. With home prices still being high in most places, people would have to stretch it to get into the home. The government is trying to push that but it is a bad idea.
We have to get away from this mentality, and the only way for that to happen is if the housing market comes down to reality levels. How it gets there is the difficult part.
Hi ufcrules1,
Low interest rates is the post 1990 Japanese fix which favored the Japanese banking syndicate at the expense of Japan. They lowered interest rates but the Japanese wouldn't budge and did not go into debt. What did it matter since Japan had its pockets picked by carry trade(loans for overseas) and bank loans to public works contractors. Its a free ride for banks who can borrow at no interest and loan out. If anything goes wrong they get bailed out. They can't lose. All they needed to do to save Japan was raise the interest rate to shut off Yen carry trade to raise the buying power of the Yen and lower taxes which would have increase the wealth of Japanese. Low interest rates are a tax cut for the finance industry that is in direct conflict with the average citizen and its not even a terribly complex notion to work out. What is worse is since banks cannot lose the resulting product does not even need to be useful. That why Japan had roads going nowhere. In the case of the tax payer they will put their money to good use.
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