Thursday, June 14, 2012

Interest rates

Right wingers often proclaim that interest rates need to go up to stimulate savings and that would revitalize the economy. It would do the opposite of course, but they have to say something. They can't say that we need to raise wages and start taxing rich people like it's 1953.

As for those that whine that their savings don't generate enough to live on, let me point out that while you may only be getting a fraction of a percent, you're actually doing pretty well. Say you had a $100,000 in the bank six years ago and the house next door was selling for $300,000, today you can buy that house with your cash. If you had bought stock at 6000 and sold at the top of the market, you would have doubled your money, and could buy two of your neighbors houses. Gold at $400/oz, and so on.

Not that I'm recommending these strategies, but that's what billionaires have been doing with their money. Why do you think they hold these "economic events". Herbert Hoover's Sec Treasury (one of the richest men to have ever lived), "Depressions are when assets return to their rightful owners".

Iceland just raised their interest rates a 1/4 point because their economy is heating up. They threw out the bankers after they crashed Iceland's economy, they gave the Europeans and the IMF the finger. Iceland is doing just fine. We could do that too.