Resolved Question
What is the biggest concern right now with this record breaking rate cut?
over 2 years ago
Best Answer - Chosen by Asker
Zero interest means "Free Money" Isn't that what got us into trouble in first place? If the patient is a stumbling fall down drunk, why would you give him more whiskey? Gov't monetary policy intended to stave off the inevitable deflation that needs to happen. Means Fed intend to "Float the Bloat" leading to destruction of dollar value if money printing presses run amuck & Bet the Debt on maintaining status quo- Auto Big3 have to "DownSize or CapSize" Pumping in injections of moola' serves no answer to basic problem they have more capacity than market share can handle.
over 2 years ago
Answers (2)
It all depends on how this low interest money going to use in the future by all types of market players. If they invest in productive areas definitely world economy will benefit in the long run. It is vital how they are going to invest these low interest funds in the future.
over 2 years ago
* You must be logged in to add comments. Sign In or Join Askpips.com.
The biggest concern is that even with banks being able to borrow money to lend at virtually no interest, they will not lend it to generate consumer spending. The reasons for this limiting of credit are two-fold. First, lending institutions are loathe to take on the risk of default in situations where the borrower may not be able to repay as agreed. Second, banks with shaky balance sheets due to mark-to-market requirements (which value long term assets in terms of their fire-sale price this month) would rather hold onto the extra cash as reserves than lend it. So, what will ultimately cause the economy to recover? What most Americans hold as their largest asset - real estate - will have to begin increasing in value for the net worth of America to rise to a level that will sustain an economic recovery.
over 2 years ago
* You must be logged in to add comments. Sign In or Join Askpips.com.
* You must be logged in to add comments. Sign In or Join Askpips.com.