Chart Shows DESPERATION Of "Rich Nations"

[Economy 52,845]

http://www.tradingeconomics.com/country-list/interest-rate

 

6 years since the crisis and Central Banks still trying SOOOO hard to stimulate economy. During normal economic times interest rates are set anywhere between 3.5% to 5% in wealthy Nations. This is where its at now:

 

Japan: 0%

Sweden: 0%

Switzerland: 0%

 

Finland: 0.05%

EU Countries: 0.05%

Singapore: 0.12%

Denmark: 0.20%

United States: 0.25%

UK: 0.5%

Hong Kong: 0.5%

 

Canada: 1.0%

Norway: 1.5%

Australia: 2.5%

 

The struggle is real

[Cody Draco 2,531]

So in other words, "rich nations" are adopting loose monetary policies currently to stimulate their economies right?

[Better Day 5,766]

I see the UK flopping as usual

[Economy 52,845]

I see the UK flopping as usual

actually UK is suppostu grow 2.7% next year. Thats the second biggest growth projection for any major developed Nation after the US which is suppostu grow at 3.1% they estimate

Canada and Australia are tied at #3 with growth for 2.3% although its economies are already in better shape than the US or UK

The UK might raise rates soon

[Economy 52,845]

So in other words, "rich nations" are adopting loose monetary policies currently to stimulate their economies right?

yes for the past 6-7 years

And in some Nations they went even beyond 0% interest rates by printing money with QE and buying assets to prop up the markets...

The US did it 3 times (QE 1 in 2008, QE2 in 2010, and QE3 2011-2014)... Europe just started their own QE and Japan has been doing it since... Well, since like forever before this world crisis even came :awkney:

[Better Day 5,766]

actually UK is suppostu grow 2.7% next year. Thats the second biggest growth projection for any major developed Nation after the US which is suppostu grow at 3.1% they estimate

Canada and Australia are tied at #3 with growth for 2.3% although its economies are already in better shape than the US or UK

The UK might raise rates soon

 

They are gonna crash in the next general election... Britain is a has been

[Cody Draco 2,531]

yes for the past 6-7 years

And in some Nations they went even beyond 0% interest rates by printing money with QE and buying assets to prop up the markets...

The US did it 3 times (QE 1 in 2008, QE2 in 2010, and QE3 2011-2014)... Europe just started their own QE and Japan has been doing it since... Well, since like forever before this world crisis even came

 

I could understand like a 2.0% interest rate to boost everything, but everyone being so close to 0% seems a tad extreme.

[Economy 52,845]

I could understand like a 2.0% interest rate to boost everything, but everyone being so close to 0% seems a tad extreme.

i think it was ok to do it in the beggining of the crisis...

Credit froze in many countries. Banks were ailed and werent lending, consumer confidence was low and people werent spending much anyways because of uncertainty

Under that environment, you cant really create a credit bubble no matter how low rates are if banks arent lending and people arent borrowing to begin with. You might as well lower rates a lot and let people pay less in interest, especially since their incomes dropped

But now that the economy is getting stronger it starts to become more dangerous to leave rates so low for so long

When the economy strengthens... Money velocity, investment, demand and spending all increase and u have to tighten monetary policy (raising rates) to prevent high inflation and bubbles from forming

The economy has whats called "maximum capacity". Thats how strong economic activity can be with rates at a certain level before over-heating begins. If u have rates at 2% and u reach full capacity and the economy is still growing, failure to raise rates will cause overheating, high inflation and bubbles

Now the economy is still very weak but were not in a crisis anymore. The Central Banks lending private banks at a 0% rate is no longer justifiable and could cause problems later down the road :shrug:

[Cody Draco 2,531]

i think it was ok to do it in the beggining of the crisis...

Credit froze in many countries. Banks were ailed and werent lending, consumer confidence was low and people werent spending much anyways because of uncertainty

Under that environment, you cant really create a credit bubble no matter how low rates are if banks arent lending and people arent borrowing to begin with. You might as well lower rates a lot and let people pay less in interest, especially since their incomes dropped

But now that the economy is getting stronger it starts to become more dangerous to leave rates so low for so long

Rates this low when the economy starts to improve can build up credit, real-estate and stockmarket bubbles... And the economy could over-heat and have inflation problems

When the economy strengthens... Money velocity, investment, demand and spending all increase and u have to tighten monetary policy (raising rates) to prevent high inflation and imbalances from forming

Now the economy is by no means strong. But the Central Bank lending private banks at a 0% rate is no longer justifiable

 

Yeah I understand the rates being extremely low back after the crisis, but shouldn't they be heading higher now? Everything at least over here in the U.S. seems to be running a lot smoother. Yeah there are still issues but I always here positive things about the economy here, definitely more than negative things. I'm not an expert though.

[Economy 52,845]

Yeah I understand the rates being extremely low back after the crisis, but shouldn't they be heading higher now? Everything at least over here in the U.S. seems to be running a lot smoother. Yeah there are still issues but I always here positive things about the economy here, definitely more than negative things. I'm not an expert though.

yeah they should. I feel like Central Bankers wanna rush the recovery to look like they are doing something. Or avoid blame if the recovery stalled

The economy has whats called "full capacity" thats basically the strongest an economy can be under a certain monetary policy before causing problems

Once u reach full capacity... If the economy is still strengthening, rates must be risen to reduce money velocity, creation of credit etc

If rates are at 2% lets say and u reach full capacity... Failure to raise rates if the economy is still growing will lead to over-heating, high inflation, bubbles and financial instability...

The higher the interest rates, the stronger the economy can be without causing issues. The growth rate also influences that as well not just the state of the economy

Thats why developing Nations that grow much faster often have to have interest rates of 6% or higher and even then their inflation is still higher than in developed Nations

Now if rates stay at 0% even as the economy picks up, eventualy we could see problems later down the road