The case against artifically low interest rates:

1. Loss of significant income from money markets, CD’s, savings accounts, Treasuries.

2. Creates pressure to raise prices of necessary consumer items and commodities.

3. Encourages government to borrow to finance increased spending.

4. Shows lack of confidence in free markets which should determine interest rates.

5. No room to maneuver if economy continues to sour.

6. Creates false sense of security.

7. Forces savers to take higher and unnecessary risks in their portfolios. Invites speculation.

8. Currency becomes unstable.

9. Tougher to develop an exit strategy.

10. Over 300 trillion in derivatives linked to the rise in interest rates.

11. Displacing rational lenders by setting irrationally low interest rates.

Related Posts:

• The financial system isn’t (or part of) the economy, it wrecks the economy.
• We will remain in the bottom of the V or U or even W.
• The overall cloud of derivatives (is it 143 Trillion now? Give a zero or so.) are not understood.(By whom?)
• Hard to disagree with any of these points about the coming double dip recession.
• Zero rates means there is something very, very wrong.

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