Lower interest rates are leading to irresponsible behavior and the shocks in our financial system is just something we are going to have to live with as long as interest rates remain as low as they are today

[o***@yahoo.com]

It would be an interesting study to examine whether low interest rates actually help a more liberal ideology. ONe where the right view is less and the leftist view actually goes up. One where there is more acceptance to a more "liberal" ideology. It is quite possible that low interest rates have helped a more "liberal" ideology to take root but the sad and ironic part is that with low interest rates we have actually achieved more income inequality in the developed nations than ever before. That means that when we had higher interest rates income inequalities were actually lower. This becomes even more interesting as the ones who have gotten left behind (pun intended) are now becoming more vociferous and are embracing an even more "rightist" view. The two things may not be linked or actually could be linked but one thing is crystal clear. Lower interest rates have led to higher levels of income inequality amongst developed nations. In order to bring some sanity in this regard as also to actually helping to develop a more responsible type of behaviour and more sanity in the financial markets with less shocks we should seriously consider raising interest rates in developed nations from the absolute pathetic levels they are today. That would mean that in my theory the 30 year bond in the US should be giving us around 5% instead of half that amount. The ten year bonds should be giving us at least 2.5 to 3 percent yield and putting your money in the bank in a FD for at least a year should give you no less than 1.5 to 2 percent. In fact your money in a savings account should also earn you at least half a percent or more.

It is about time that interest rates are raised more so on a philosophical point than a financial one (although the interest rates I have mentioned also work on a financial level to stabilise the economy). We need more stability in our financial world and entrepreneurs need to able to take risk with some consequences rather than no consequences which exist as of today.

[v***@at.BioStrategist.dot.dot.com]

I think low interest rates (and perhaps some negative or complex natural
or real rate) is what drives the Kagan eponential velocity into harmonics and
strange attractors, explaining the "liquidity trap". Having been schooled in
Sargent Wallace 1975's high rate rational expectations strange detractor, I
feel the only peggable rates are between 2-6%, and that anything else can't
be pegged, begging for other intstruments. However, given that electronic
money (Wenninger 1987 & Partland 1992, FRBNY QR) make money suppl no longer
measurable. That Metro card and Kinko card is really the "Commodity based
currency" the Fed supposedly terminated in 1913.

Interest rates are an exponential quantity in economics (whether in Kagan
velocity or just compounding), but the real rates are a function of the rates
we use, hence we cannot be sure if the transformation at very small rates
crosses over into the imaginary (complex number) range, triggering harmonics
(theory of oscillations and stability). Hence we do not fully understand if
the liquidity trap is caused by low rates or the other way around. This may
explain Haugen's observation of persistent volatility during the Great
Depression which suggests we should be looking at higher order moments and
maybe chaos theory to fully understand the perplexing complexity.