Interest Rate Quotes
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Monetary policy has less room to maneuver when interest rates are close to zero, while expansionary fiscal policy is likely both more effective and less costly in terms of increased debt burden when interest rates are pinned at low levels.
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No one will lend at a negative interest rate; potential creditors will simply choose to hold cash, which pays zero nominal interest.
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There will not be an automatic increase in interest rate when unemployment hits 6.5%.
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The supply-side effect of a restrictive monetary policy, moreover, is likely to be perverse. High interest rates enter into costs and thus exert inflationary pressure, as well as inhibiting the expansion of capacity or the introduction of cost -reducing capital improvements.
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The world economy is in a nosedive, and understanding what I call "depression economics" - the weird world you get into when even a zero interest rate isn't low enough, and a messed-up financial system is dragging down the real economy - is essential if we're going to avoid the worst.
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The bond price, and, as an arithmetical and rigid consequence, the interest rate is an inherently restless variable.
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What the Depression teaches us is that when the economy is so depressed that even a zero interest rate isn't low enough, you have to put conventional notions of prudence and sound policy aside.
