Interest rates are not sustainable if higher than GDP growth?

Discussion in 'Economics' started by crgarcia, Oct 7, 2009.

  1. When interest rates are higher than GDP growth, most people won't be able to pay their debts?

    How can people pay high interests from economic activity, if the economy just doesn't grow that much?

    This makes a casino-economy where most people come to "play" (by getting debt), yet only a few will profit in the long run.
    Most will lose, ending up with less than they started with?
  2. What about inflation? You might want to look at the Taylor Rule, it'll be educational.
  3. Inflation would be included in GDP growth (unless GDP is compensated for inflation).
  4. Go to your local public university, get the syllabus for macroeconomics and statistics and buy the required text's and learn this shit.
  5. Daal


    "In the long-run the return of financing GDP cannot be higher than the return of GDP" - Bill Gross
  6. Great quote.

    This proves it.
  7. sahtt


    If you fully understand the terms it's intuitive. If a nation/person borrows at a greater rate than their income/wealth increases it's not sustainable.
  8. So you're talking about nominal, rather than real GDP.

    Taylor Rule, check it out...
  9. So, where is the American gov't and its citizens going?