Article – The high price of low interest rates

An article by author Lionel Shriver about how we are now paying for the years of low interest rates and what to expect going forward. Shriver, you may recall, is the author of, among other works, the rather probably-prescient The Mandibles.

Paltry interest rates haven’t only been profoundly unjust – making a mockery of prudence, frugality and the old-fashioned habit of paying for stuff with money you’ve already made, while encouraging recklessness, profligacy and the terribly modern habit of buying stuff with money you may never earn. Nil rates were also systemically irresponsible. Reward debt, get more debt. It shouldn’t surprise central bankers that sovereign debt is through the roof (the US government now owes an unimaginable $31 trillion, the UK government nearly 100 per cent of GDP), that corporations have never been more leveraged, or that household debt is climbing towards its pre-2008 high. Soaring debt is intrinsically unstable – building an economy on borrowed money is like constructing a house atop a big black pit – and fiscal stability is what central banks are meant to ensure, not an ever-rising stock market.

To paraphrase Ayn Rand, you can ignore bad fiscal policy but you cannot ignore the consequences of ignoring bad fiscal policy.

5 thoughts on “Article – The high price of low interest rates

  1. In both our countries this is a house of cards ready to come tumbling down around our ears. Get Debt free ASAP and dedicate your resources to achieve this as best you can while still maintaining some sort of a life. My co-workers and some family members do not think anything bad will happen in the next few years. They look at 2008 and say that it was bad globally but not for them personally. While fiscally true for them at that time, they are still accruing debt as a matter of course. The truth is that if the US economy fails so will the other Western countries and then the Eastern ones as well. Globally we are all tied together in one way or another. To survive the next few years will be challenging and for those out there, like me, looking to retire. I wish you luck. TTFN

  2. Wanted to thank you for recommending this book a few years. Even though it wasn’t the usual apocalyptic story I normally read, it was very interesting read.

    And a VERY plausible future outcome for us, probably the most valid of the upcoming choices…

  3. If you have no debts whatsoever, you are so much better for that fact. Economic Reality will still bite you in the palapas, but not nearly so much as having a domicile or vehicle that can be taken away for lack of payment.

    • Our homes, land and vehicles are never owned by us and this is proven every year with the rents we pay to the state. Stop paying the yearly rent and the true owners come for their property. We don’t own these things because we never paid for them with money. Gold & silver is the only money that truely extinguishes debt, All other forms of ‘payment’ merely transfers the debt from one party to another, repeating the debt enslavement cycle. Wonder why FDR outlawed the private ownership and use of gold for payment – see above.

  4. they talk about capitalism and how the ‘market’ should dictate rates and prices then the fed and .gov manipulate interest rates, (instead of the banks who actually loan out the money) agriculture (pay people not to grow things) meat, dairy, transportation, oil, gas, etc. Name one thing that isn’t manipulated by some political dipshit who thinks they are smarter than the rest of us.

    it’s a big club, and we’re not in it.

    Silicon Valley Bank executives gave themselves millions of dollars in bonuses the day before the bank collapsed.

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