Discussion in 'Currencies' started by hiho, Oct 31, 2011.
Bummer down she goes
That's a tough one, most people haven't got a clue what's going to happen this year, let alone next year.
In the ivory towers and at expensive wine bars the theory is that the lower the interest rate the more people spend.
Meanwhile in the real world it turns out that people save more the lower the interest rates are because surprise surprise people are saving for a reason and with next to no return the amount needed to be saved is inordinately larger.
15% interest rates and the debt free will spend. 15% would be great for the retiree's whom did save for their retirement. However many loud mouths are drowning in debt so a meagre 0.25% movement is cause for serious whining or major celebration. Not that it really matters, the private banking cartel based in the US wants low interest rates so it's low interest rates the world will get
Market is pricing 100% chance of rate cut in December..
That's true. If interest rates were 15% I'd be spending more than I do at the moment but I'd also be spending less on PMs so might balance itself out a bit.
yeh - you'd be giving more to the thieving banks!
and spending a lot less on life's other nescessities...
People dont save more when rates are low, if you leave rates too low it tells people "why save you wont get much return for it", they take on more debt because the money is cheap, low rates is one of the reasons for the housing bubbles around the world and soaring credit card debt
There is de-leveraging happening though but I think its because more and more people (even some of the zombies) realise that debt is going out of fashion and they have seen other peoples debt grief so they are paying them down (in the US anyway) we still have a huge private debt to gdp ratio
Even at 0.1% interest over 25 years on a $1 million loan is $780 a week.
There is a limit to what people can borrow.
Additionally if people see asset prices falling then they aren't inclined to buy. Cue Japan where buying still isn't cool and that's been what? 20 years since their bubble burst?
If its interest only thats $192.31 a week using fiat currency and you can put the balance of the repayment into gold bullion for 25 years. Wow what a moat of liquidity
And we have a rate cut!
Damn, I hate taking a hit on my cash investments >_>
Obviously not in a term deposit :/
cash investments? :lol: isn't that an oxymoron?
I generally stay away from TDs, because I like to pull out before things reach critical mass
While the can keeps getting kicked down the road, cash remains useful.
Of course, I'm prepared to lose all my AUD deposits if I fail to withdraw and convert it quickly enough. @[email protected]
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