you're reading...
Europe, Italy, USA

When low rates beget lower rates (and more debt)

Stefano Fugazzi (ABC Economics) – Between December 2014 and May 2015, an average of $2 trillion in sovereign debt, much of it being issued within the Eurozone, was trading at negative yields.

Current interest rates (also known as “policy rates”) are lower than at the height of the 2008-09 crisis both in nominal and real terms.

Although policymakers have kept rates low for quite some time, general consensus is that they do not necessarily are at “equilibrium” (if they were they would be conducive to sustainable and balanced global growth) but, rather, they have contributed to fuelling costly and continuous financial booms and busts.

The outcome? Stated simply, too much debt, too little growth and excessively low interest rates. And low rates usually lead to even lower rates.





One thought on “When low rates beget lower rates (and more debt)

  1. too much debt = another bang but bigger

    Posted by Michael Cushing | July 30, 2015, 6:15 pm

Leave a Reply to Michael Cushing Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

acquista ABC ITALIA, edizione 2016

Click here to download “Brexit?”, Fugazzi’s new book on the EU Referendum

ABC Economipedia, 2nd edition now out!

London One Radio

PIL – Professionisti Italiani a Londra

%d bloggers like this: