What would interest rates be if they were set by the MARKET?

What event would create a scenario where short and long rates spike?
I mean FF Rates to say 5%, and 30 year bond rates to 8%?

 

The dollar declines out of nowhere against other currencies to "new lows" on the chart. :eek:

 

Rates would still be very low.
As there are very few real investment opportunities.
(Opportunities to profit, not opportunities to lose money).

I'm not just talking about financial investments, I'm talking about business opportunities in the real economy.

 

If they were actually set by the market and we didnt have the fractional reserve system, interest rates would be through the roof. I remember hearing about how when people used to borrow money before the fed came along that interest rates were around 70% per year. Not sure how true it is, as I had just heard it in school from one of my teachers back about 15 or 20 years ago.

 

You must be referring to the Bank of Bonanno, Columbo, Gambino, Genovese and Lucchese.

 

Not true.
Demand for money to borrow increases only as the economy improves.

During recessions GDP growth is negative.
So, in average businesses are not getting moremoney.
Why would they borrow?

 

our obligations and debt and increased money supply, though, should be negative for US Debt, and thus interest rates, had they not been artificially manipulated lower, would obviously be higher...
I guess I wonder, and it's anyone's guess, how mUCH higher they would be...