few more arguments about interest rates direction

[Winetalk.com]

here some more evidence that the rates will not go sky high...

1) Bank called CD maturing in 2018, which was paying a meager 5.25% a year.

2) ETF I have with very small average maturity and consisting of Government paper ONLY made a new 52 weeks low last week (KGT),
while ETF's with average 15-20 years weighted maturity have not
(MFL, PTY, PHK)

what the heck bankers and investors smell????

[pushpills]

it's not going to go sky high, just highER and considering the rates, people still don't have much to complain about.

[Rolo]

I´m more worried about economic pessimists who try to constrain the sense of optimism that drives economies forward... as long as these "naysayers" are not controlling the agenda, then interest rates will not go sky high.

Faster access to information, more travel, more world trade, new democracies with marked economies etc... overall I think we will never see high interest rates again - the world has evolved.



Last edited by Rolo at Apr 18 2004, 04:25 PM

[RawAlex]

Interest rates need to slowly climb back up to a more normal range. Low interest rates are good for a while, but over time, they lose their effectiveness as all other countries just adapt and play the same game.

Slowly easing the rates back up will give the fed some space to play in the future. Leave them low, and there is nowhere to go when the bottom falls out next time.

Alex

[Mike AI]

Originally posted by RawAlex@Apr 18 2004, 07:49 PM
Interest rates need to slowly climb back up to a more normal range. Low interest rates are good for a while, but over time, they lose their effectiveness as all other countries just adapt and play the same game.

Slowly easing the rates back up will give the fed some space to play in the future. Leave them low, and there is nowhere to go when the bottom falls out next time.

Alex

What does other countries lowering their interests rates have to do with anything?

[RawAlex]

Mike, interest rates are dropped to stimulate the economy. A major (and most often intended) side effect is that the currency drops when compared to others. With the US dropping interest rates, the value of the US currency has dropped when compared to other major currencies (yen, euro, etc).

This difference makes imports more expensive, makes internally produced goods a better "value" in the market place, and drives job growth and economic activity within the country. The lower interest rates make it easier for companies to borrow to finance expansion of factories to support this new internal demand.

Once other countries also drop their rates, it makes it harder for these benefits to occur, as all things stablize back to their more natural levels. Japan has attempted to play this game for years, with interest rates approaching zero percent. Like any stimulant, it runs out over time...

Alex

[Winetalk.com]

Originally posted by Rolo@Apr 18 2004, 06:33 PM
I´m more worried about economic pessimists who try to constrain the sense of optimism that drives economies forward... as long as these "naysayers" are not controlling the agenda, then interest rates will not go sky high.

Faster access to information, more travel, more world trade, new democracies with marked economies etc... overall I think we will never see high interest rates again - the world has evolved.

Rolo,
I don't think you know cause/effect of interest rates and economy...

Good economy puts preasure on interest rates,
recession eases the preasure.

Interest rates are the PRICE of borrowing money,
in booming economy the demand for money is high,
in recession the demand is low.

if what you call "naysayers" prevail-
we'll have recession and LOW interest rates.

[Vick]

Originally posted by RawAlex@Apr 18 2004, 07:49 PM
Interest rates need to slowly climb back up to a more normal range. Low interest rates are good for a while, but over time, they lose their effectiveness as all other countries just adapt and play the same game.

Slowly easing the rates back up will give the fed some space to play in the future. Leave them low, and there is nowhere to go when the bottom falls out next time.

Alex

Alex - low interest rates support a strong housing market

That in term helps support a fair economy

Part of the American Dream is owning a home

Low interest rates encourage and enable more people to become home owners

.... and you know all the advantages of being a home owner

[Winetalk.com]

Originally posted by Vick+Apr 18 2004, 09:40 PM-->