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what happens when an interest rate is too low?
And I don't mean to the economy, but to you as the buyer.
3 Answers
- StilwaterLv 41 decade agoFavorite Answer
A low rate is kept there when the central bank and the government want people to borrow, go into debt, and spend the money on things and investments. Goldman Sachs and other investing institutions borrow money at 0% and invest it in instruments that return a higher rate. This could be stocks or bonds. If you are using someone else's money to get rich, that's called leverage.
- rtfmLv 71 decade ago
What do you mean, when an interest rate is too low? If I'm borrowing money, I *want* the interest rate to be as low as possible. ZERO would be the optimum interest rate.
Can you explain what you mean by "too low"?
