tag:blogger.com,1999:blog-38764987.post5880007540026446675..comments2023-07-15T04:20:16.543-05:00Comments on Almost Diamonds: Monetarism and the Housing BubbleStephanie Zvanhttp://www.blogger.com/profile/15182490110208080002noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-38764987.post-23191271491063117232008-09-29T07:34:00.000-05:002008-09-29T07:34:00.000-05:00Thanks, Mike. I knew the Fed Rates were below the ...Thanks, Mike. I knew the Fed Rates were below the CPI for several years. I didn't think about what that meant to savers, though--basically that money in savings still loses value for that entire time.Stephanie Zvanhttps://www.blogger.com/profile/15182490110208080002noreply@blogger.comtag:blogger.com,1999:blog-38764987.post-84843813530247601282008-09-27T21:19:00.000-05:002008-09-27T21:19:00.000-05:00One of the problems of low-interest credit is that...One of the problems of low-interest credit is that it screws up the reserves of banks. As Washington Mutual learned, banks can't make a profit by offering short-spread revolving credit while at the same time paying higher than market rates on savings. Banks were almost forced to go with alternative securities by a low-credit policy. They shored up their reserves by going after lower-quality higher-potential-yielding and it cost them. Now they have been swallowed by what is starting to look like a massive consolidation in the banking industry. <BR/><BR/>When rates are low like this, smaller banks just can't compete with larger banks. <BR/><BR/>Another problem that I see with low interest rates is that people see no reason to save their money in solid savings accounts which pay barely over 2% (even though it is compounding interest) we have become such a short-sighted economy that it makes no sense to have a savings account when we could be using our money instead to pay revolving debt. Live now, pay later.<BR/><BR/>By continually lowering rates, the Fed may have doomed us.Anonymousnoreply@blogger.com