how can the free market rectify with low interest rates. surely politicians and economists appreciate that for a free market to grow capital is needed. funds for start ventures is required for the output to gain value. so if there is no return for investors there is no incentive to save to meet this need. i understand the fiscal policy is to make up for the lack of investment but it cannot continue indefinately as soon as the stimulus is over the market will have no investment. for the free market to resolve ITSELF higher interest rates are NEEDED to provide reason for investment. surely the current tactic of low interest rates and fiscal increase will not work in the long run and as soon as the stimulus is finished the economy will be back were it started with low demand. what do you think. does the policy defy economic principles.
Government always takes the path of least resistance, no matter how damaging the long term effects. Bernanke & Crew have essentially taken the Greenspan playbook and put just a mild spin on it, in the hopes of getting reflation and consumers to spend money on shit they don't need again, basically striving for another bubble. Anyone think I'm wrong here?
no i agree with you. i guess they hoped that by the time this problem started they would be out of a job. but they are not thinking about their own investments. if the credit market fails and people stop investing the economy will fall and all investments will collapse. also do you agree with my view of the situation with the interest rate. it interests me what you think blsh. i have written a paper which is being looked at by the treasury in britain and the opposition party too. it is in relation to the problem addressed above and a new security i have devised to solve it. so if you have an opinion as to how severe it could be i am interested to put it forward in the future. if i am right the whole credit market could collapse unless they get capital soon. it sure isn't going to come from credit or equity because stock values are linked to credit gearing ratios etc. unless a new security is introduced capital generation and secure investment is impossible.
One could argue "mild" Bernake has it set at 0. He has bailed out much more than Long Term Capital or w/e it was, before my time. Bernake is anything but mild. I like stock777 picture of him and the "Inflationist" title. Bernake truly is Helicopter Ben I'm wondering at what point he stops. The market tried to tell him last week that he should stop. He came right out said no. He also said the inflation play was ridiculous. Wonder how high commodiites go before he is replaced. Is the guy shell shocked from last fall? Market dipped thinking he would tighten, he said no, we see who is right. All eyes on Fed meeting. I thought he was the right man for the job, but those presses are smokin hot
While investment return on traditional investments would be lower, borrowing would be a lot higher resulting in less spending and eventually your investments would still yield low results.
by your comment do you mean equities are traditional investments and though they will be lower the return on credit would be relatively lower. if that is the case i agree but it doesn't resolve the problem people will still make a loss regardless of what they chose. seriously where would you invest today every thing will fall in value or provide no return on a regular basis.