. . .
1 “Can they.”
2 “May they.”
1 “Could they.”
2 “Should they.”
. . .
1 “The Federal Reserve cannot allow interest rates to rise because the Federal Government would be obligated to pay staggeringly more interest to service the ever metastasizing National Debt.”
2 “Someone in the Bureaucracy must be sober enough to realize that a rise in rates will trigger profound and devastating economic and financial consequences. Everyone will need to look up the word ‘derivatives’ in the dictionary.”
1 “I could see the Federal Reserve raising rates by ‘25 basis points,’ as they say, to show that they cannot do nothing. If they appear effete, they are effete.”
2 “Even a quarter percent rise may be enough to tip over the economic and financial game. Perhaps in desperation the Fed can generate real inflation then the Federal Government can pay the interest on the National Debt with deflated dollars . . . which reduces the real cost to the Government.”
1 “The Federal Reserve does what it wants to do, but its primary mandate is to maintain price stability. Inducing gross price instability is directly contrary to its raison d’etre. But then, do they care?”
. . .
2 “The dollars may not be worth anything in a few years, yet I will not pay money to store my money in a bank and also risk having my money confiscated by the bank to pay the debts of the bank.”
1 “When they slither from the ZIRP – zero interest rate policy – to the NIRP – negative interest rate policy – and start charging me to keep my deposits in their failing financial institutions, I am tucking all of my money in the Sealy Posturepedic Credit Union.”
. . .
[See the e-commentary at Money “In The Bank” Or “Under The Mattress” (October 8, 2012).]
Bumper stickers of the week:
Compound interest is described as the greatest invention of the 20th Century, yet it may be the most vexing challenge confronting governments in the 21st Century.
“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” Ernest Hemingway, “Notes on the Next War: A Serious Topical Letter,” Esquire, September 1935
What goes down must go up?
ZIRP (Zero Interest Rate Policy) = Official National Policy . . . for all time?
NIRP (Negative Interest Rate Policy) = the straw that breaks