Re:America's “Friendscape” Crisis
by imtringued on Monday July 26, 2021 @03:22AM
(#27956629)
> My personal read is that a huge amount of that in the last decade or so has been a consequence of basement central bank rates.
The central bank doesn't decide the interest rate, rather it is closer to an autonomous organization whose goal is to let interest rates follow the economy.
Low interest rates are the result of the preference to hold deposits and the preference to not take on debt. If you want higher interest rates you'll have to raise the government debt ceiling or kill deposits with inflation/negative interest rates on deposits. Considering the demand for perpetual savings it only makes sense that governments would issue perpetual bonds.
The reason why perpetual bonds are interesting is that they only have to be paid back when they have to be paid back.
The central bank doesn't decide the interest rate, rather it is closer to an autonomous organization whose goal is to let interest rates follow the economy.
Low interest rates are the result of the preference to hold deposits and the preference to not take on debt. If you want higher interest rates you'll have to raise the government debt ceiling or kill deposits with inflation/negative interest rates on deposits. Considering the demand for perpetual savings it only makes sense that governments would issue perpetual bonds.
The reason why perpetual bonds are interesting is that they only have to be paid back when they have to be paid back.