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Re:Ask YC: Is there a recession/depression coming? by rms on Tuesday December 11, 2007 @09:34PM (#88523)
Do you think that the Bush level of deficit is sustainable? If not, what will happen to the US Dollar and the average US citizen? I can understand why it is reasonable to lower interest rates, but it seems to be ignoring the much bigger problem.
Re:Ask YC: Is there a recession/depression coming? by ctkrohn on Tuesday December 11, 2007 @09:59PM (#88536)
The deficit is certainly a problem, and it is not sustainable. However, interest rates don't really have much of an effect on the deficit. Sure, the government has to borrow money at a rate determined by the market -- why would anyone invest in a government bond paying, say, 2% when you could get a AAA corporate paying a much higher rate? But Congress has unfortunately shown a willingness to borrow money regardless of the interest costs. Keep in mind that short-term government interest rates were in double digits for most of the Reagan 80s, when the deficit was massively expanding.