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If we're entering a strong economic recovery, why are savings bonds, CDs, and Treasury notes?
still paying such low returns? Doesn't anyone have faith in the government's ability to pay? If this administration is doing such a good job, wouldn't that be reflected in the government bond market? Just curious.
George, I am not an economist, nor did I ever claim to be, so maybe you can tell me what economic recovery has to do with inflation. I know I'm paying more for the same can of tuna fish and that bread has gone up another nickel a loaf, but is that economic recovery?
George, I am not an economist, nor did I ever claim to be, so maybe you can tell me what economic recovery has to do with inflation. I know I'm paying more for the same can of tuna fish and that bread has gone up another nickel a loaf, but is that economic recovery?
DM--I heard excerpts from some speeches on the news, ABC, I believe. I was wondering if they were directed at small target audiences or reassurances to the general public.
DM--I heard excerpts from some speeches on the news, ABC, I believe. I was wondering if they were directed at small target audiences or reassurances to the general public.
7 Answers
- megLv 78 years agoFavorite Answer
The low interest rates are due to monetary policy and the low inflation rate. If the ability of the government to pay was in doubt the rate on government bonds would be high because there would be risk Premium on them
- random_manLv 78 years ago
You lack an understanding of how interest rates work.
"Doesn't anyone have faith in the government's ability to pay?" The low interest rates of T-bills (which affects the interest rates of everything) is, in part, a reflection of people's tremendous faith in the US Government's ability to pay. The greater the confidence of investors, the lower the interest rate demanded. Look at countries like Greece and Italy, where investors have less confidence the the government's ability to pay - higher interest rates.
The administration "doing a good job" is not reflected in high or low interest rates. Besides currently interest rates are being held artificially low by the Federal Reserve's bond-buying program, called QE3. The intent is to keep rates low to encourage businesses to borrow and invest in the businesses and grow their companies. One could debate how well that's working, but certainly they've been effective at keeping rates low intentionally.
- Anonymous8 years ago
The top 5% of workers are in a strong recovery. Those jobs that pay over $100,000 a year. Those making over $40,000 a year are holding there own. Those making less than $40,000 a year are in sink mode. And the U.S. Government is buying there own bonds back. That keeps your interest rate low when you need pay back the money. And saves the cost of printing money. As that can be done electronically today. Curbing inflation as no new money is in circulation.
- GEORGE BLv 78 years ago
College economics textbook definition of inflation:
"An increase in the amount of money in circulation (being printed) WITHOUT a corresponding increase in the amount of goods and services produced or provided."
You had better read and re-read that definition until you understand that inflation is NOT rising prices.... it is a CAUSE of rising prices.
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- dm_felionousLv 78 years ago
Has someone claimed this is a strong economic recovery? I was under the impression that were holding our head above water and we think we can see land occasionally when the waves lift us up but...it could be cumulus clouds.
- jxt299Lv 78 years ago
Cart before the horse, friend. The economy is recovering BECAUSE of low interest rates. The whole idea of low interest rates is to encourage investment and investment-type spending, and it is working.