tag:blogger.com,1999:blog-2761684730989137546.post3960681881896778550..comments2024-03-28T07:50:06.102-04:00Comments on Mike Norman Economics: The Perpetual Problem With Interest Rates — NeilWmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2761684730989137546.post-9661392062098926572020-12-29T10:22:59.598-05:002020-12-29T10:22:59.598-05:00“Finally, for every debtor there is a creditor, so...“Finally, for every debtor there is a creditor, so the adjustment of rates equates to income redistribution”<br /><br /><br />But it nets to zero so it can be ignored!!!!! jkGreghttps://www.blogger.com/profile/03139782404004492965noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-6985462785673378222020-12-29T06:17:31.096-05:002020-12-29T06:17:31.096-05:00It also doesn't take into account that the gov...It also doesn't take into account that the government is a net payer of interest, so raising rates actually increases net transfers (income) from the government to the non-government. In this regard it's fiscal expansion, all else equal. The opposite is true when rates are cut: income is removed. (It's fiscal consolidation. All else equal.)<br /><br />Furthermore, rate setting is price setting by virtue of the fact that the cost of credit is reflected in the cost of all goods and services. Raising rates necessarily increases the general price level and cutting rates does the opposite. This goes against mainstream belief.<br /><br />Finally, for every debtor there is a creditor, so the adjustment of rates equates to income redistribution.Mike Normanhttps://www.blogger.com/profile/15682385425253710230noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-45414111190306223492020-12-29T02:13:00.881-05:002020-12-29T02:13:00.881-05:00The perpetual problem with interest rates is they ...The perpetual problem with interest rates is they are managed via welfare for the banks and the rich:<br /><br />E.g. to lower interest rates in fiat, limit its use to banks - thus establishing a "natural" interest rate of zero percent in fiat.<br /><br />E.g. to raise interest rates in fiat, issue inherently risk-free sovereign debt at positive yields and interest - thus providing welfare proportional to account balance.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.com