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Higer interest rates will help those who saved their money, won't they?
If no agreement is met by Aug 2, 2011 to cut deficits and avert a debt default, the United States would run out of money unless the cap on government borrowing is raised. A failure to raise the debt ceiling could hurt the U.S. economy and drive up interest rates. These higher interest rates affect borrowing; will these higher interest rates also pay better interest rates for those who have saved their money and offer them more opportunities?
@View: You are so correct: Markets Spike on Bernanke's mention of a third round of quantitative easing, "QE3,"which is new to the Fed's line. Inflation skyrocketing in the US and all around the world has China watching and worried about the USA. A drastic rise in commodity prices caused by the devaluation of the US dollar will have a major impact on inflation in China, on China’s economic growth and on the Chinese people's daily lives.
@LikePepsi: Families are out of control on spending. Learning to buy with cash and not charge is good for families. By having money in the bank, that grows due to higher interest payments helps offset additional food prices for everyone.
@Bob: Thank you for a very clear answer; the politicians of both parties are our neighbors and family, they will experience interest changes. People are not recycling, repairing or wearing out things. Too many items charged without a thought to having a savings account and not enough income to have a comfortable life due to multiple jobs and overtime paying for debt.
@Dan: Higher interest rates will slow down those who purchase on credit and will reward those who save.
@Kandasamy: Exactly! Both will have a good effect on inflation.
I have tried to choose (5 star Kandasamy) the best answer (my opinion).
I am unable to get the following decision to post.
I appreciate all of you who took the time to answer my question. The world watches on with no decision for the economy. Bernanke said the Fed was not ready to make any new stimulus measure in the near term; a possible QE3 would inject liquidity into commodities markets and could result in a weaker dollar. We can only pray the borrowing will slow down and folks will stop getting so deeply into debt without too much turmoil to the USA and other economies.
5 Answers
- ?Lv 710 years agoFavorite Answer
yes certainly true. if the deposit rate of interest goes up naturally the lending rates also go up then the savers will feel happy anddon't havers will be irritated as they have to pay heavily and will be un comfortable because of such borrowings/hurdles in borrowings
but both will have a good effecton inflation. the haves deposit more money and the havenots will restrict borrowing due to heavy interest burden this will lead to a downward trend in the quantity of money in circulation
- Anonymous10 years ago
I feel the US has very few options on the table but to lift the debt ceiling as an immediate measure.
Another factor is even if the ceiling is lifted the new borrowings will come at a premium/higher rate of interest.This is because none of the investors will put their money at a lower rate after doing their country risk assessment. The fed is trying to announce a QE3 so that it could as usual print money and settle part of its own government debt after lifting the debt ceiling (So that the ever growing debt problem cycle continues on & on till it becomes too big a bubble that goes out of control as it has happened many times in history in many parts of the world). This could result in inflation skyrocketing not only in US but all around the world.
- 10 years ago
Yes. However, the higher interest rates will cause inflation which means that the price of what you purchase will go up also. So, you may earn more in interest but you will likely have to spend much more also (as time progresses) due to inflation and the devaluation of the dollar. The devaluation of the dollar is particularly bad because so much of what we buy is imported from other countries. You see no one will clearly be a winner here except the scumbag politicians of both parties.
- likepepsiLv 710 years ago
Yes, higher interest rates help those who have saved money because banks will pay more interest. The only catch is that there are a heck of a lot more people who are debtors than savers, and my feeling is that the government will try everything to keep interest rates low. Also, higher rates will increase the amount of the country's debt since we will have to pay higher interest to finance our ongoing borrowing.
