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Getbig Main Boards => Politics and Political Issues Board => Topic started by: Bindare_Dundat on January 22, 2009, 08:13:04 AM

Title: Goldmann Sachs: "The interest rates at 0% are too high"
Post by: Bindare_Dundat on January 22, 2009, 08:13:04 AM

Can an interest rate of zero be too high? Unfortunately, yes. A new analysis by Goldman Sachs (GS) concludes that the Federal Reserve's cut in the federal funds rate to a record low of zero to 0.25% on Dec. 16 isn't going to be nearly enough to get the economy going again. The report says the Fed would need to reduce the federal funds rate to negative 6% by the end of 2010 to supply the needed amount of monetary stimulus.

The problem: It's literally impossible to cut interest rates below zero. As a result, "we are entering a world with interest rates that are far too high for the economy's good," Goldman Chief U.S. Economist Jan Hatzius wrote in a Jan. 16 research note.  ::)


http://www.businessweek.com/bwdaily/dnflash/content/jan2009/db20090119_561565.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

Title: Re: Goldmann Sachs: "The interest rates at 0% are too high"
Post by: Saxon on January 22, 2009, 08:25:45 AM

This is similar to what happened in Japan during 90s.  Deflation could potentially be a major problem for many countries,

I can't remember were I read it but someone was actually proposing taxes on savings, with the idea to get people spending savings they have ( I think it was in the Times).  Totally retarded.

Title: Re: Goldmann Sachs: "The interest rates at 0% are too high"
Post by: Hereford on January 22, 2009, 02:27:59 PM

Remember that the interest rates that are quoted here are the interest rates that banks can get. You will still have to pay whatever they want to offer.

A lot of people think all this interest rate dropping means that they can get 0% loans. Not true...