Wednesday, October 12, 2011


Yes, I actually started to type up a bit to make me not wrong but then I had to go do something. So, yes, low interest rates are, in this case, proof that your economy sucks and not something to be proud of. Low rates can be what Cameron thinks, or pretends to think, they are, the result of fiscal responsibility They aren't now.

Anyway, this is in part a tendency to be sloppy when talking about interest rates. There are long term/short term, nominal/real, and often we lump them together even though they aren't the same thing. Fed can control short term nominal rates, long term nominal rates more set by expected inflation, and while in this country we normally see Treasuries as lacking a risk premium, interest rates, including government debt interest rates, include a risk premium.