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To: NeoCaveman
Our zero rate policy has been effectively a “tax” on savers and retirees for the benefit of speculators. Savings = investment. Savings require higher interest rates.

If interest rates are lowered, people need more principal to compensate. Thus, potential retirees and other savers are holding on to those jobs and accumulating more cash to compensate.

The feds have put themselves in quite a bind. How will they ever pay the interest on the accumulated debt if the interest rates get real?

I know one of the reasons for the low interest rates was so the stock market looked more desirable. It probably backfired. Responsible people concerned about their financial well being are likely to avoid the risk taking if they need more savings to generate any meaningful cash.

20 posted on 08/15/2010 7:56:04 PM PDT by grania ("Won't get fooled again")
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To: grania
The feds have put themselves in quite a bind. How will they ever pay the interest on the accumulated debt if the interest rates get real?

They can't.

Then again I don't know if they think more than 2 years ahead anyways.

21 posted on 08/15/2010 8:06:33 PM PDT by NeoCaveman (Defeat Dingy Harry Reid)
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