Demand canot be distorted by interest rates ,It is an old outdated economic view.

Observe China and India and eventually Germany .

Demand goes up no matter what happens to interest rates as long as purchassing power holds on and reachmess is being built up without resorting to more credit than individuals or corporations should require . Debt has to be held within healthy limits .

What you get by acting on types is either holding inflation or accelerating it depending on whether you increase ot reduce types .

At the end of the day however reducing types or holding them low for a too long period , does not propell activity as long as purchase power is weakening . All you get is costs inflation which adds to the burden of the economy to grow and more specifically to grow creating reachness ( added value ) .

The bubbles created due to old speculative principles are leading the economy further into the mud from which right now is impossible to escape unless drastic measures are applied everywhere at all levels .


Published in: on mayo 6, 2011 at 12:08 pm  Comments (21)