Keeping domestic prices for food and energy artificially low has proved to be not only ruinously expensive, but also very ineffective in achieving the declared goal of helping to alleviate poverty.

The policy is rooted in central planning, which, three decades ago, led to artificially low prices and, in turn, to shortages of basic necessities and key production inputs, such as grain and steel.

Therefore, prices could be low but not abnormally low.

Artificially low exchange rates, restrictions on capital flows, and excessively large currency reserves all create global imbalances.

The Nazarbayev administration has tried to balance relations with Russia and the United States by sending petroleum and natural gas to its northern neighbor at artificially low prices while assisting the U.S. in the War on Terror.

Europe, too, will get a bloody nose if it keeps trying to artificially prop up asset prices in the periphery.

Developing country central banks keep interest rates artificially low to ensure sufficient low cost financing for the public sector, while avoiding large fiscal deficits and high inflation.

Do Low Interest Rates Ensure High Asset Prices?

For some, low prices would render them insolvent.

After all, managing for the short run encouraged mortgage lenders to offer artificially low teaser interest rates to lure potential homeowners.

Maintaining these countries excessive prices and nominal incomes with artificially cheap credit guaranteed by other countries would only make the loss of competitiveness permanent.

The polarization of borrowing costs has politically explosive distributional effects Germany is borrowing and refinancing its existing debt at artificially low interest rates.

Moreover, while China may have profited from the rise in government bond prices over the last few years, prices have been inflated artificially by expansionary monetary policy in advanced countries, which implies that the bubble could burst.

Finished goods were imported at excessively high prices set by Russia, while the prices for Donets' industrial products was low.

Many low income countries will suffer from the decline in commodity prices.

Many American congressmen, for example, complain that American jobs are being destroyed by China s intervention in currency markets to maintain an artificially low value for the yuan.

Producers of primary commodities often suffer from the low prices paid to them.

But if those reserves mainly take the form of dollars, then their rising demand allows the United States to finance its external deficit at an artificially low cost.

Like most economists, he believes that if policymakers try to keep interest rates at artificially low levels for too long, eventually demand will soar and inflation will jump.

Simply put, surging capital flows into the US artificially held down interest rates and inflated asset prices, leading to laxity in banking and regulatory standards and, ultimately, to a meltdown.

America s economy was blessed in the 1990s with low energy prices, a high pace of innovation, and a China increasingly offering high quality goods at decreasing prices, all of which combined to produce low inflation and rapid growth.

China will come under pressure to revalue its currency (now being held at artificially low levels) so that Chinese exports are more expensive and imports from others (including the US) cheaper.

Floating exchange rates were supposed to prevent countries from manipulating their currencies, but, by accumulating large quantities of US treasury bills, East Asian countries, especially China, kept their exchange rates artificially low.

Germany, with its notoriously low inflation rate, may be among the first countries to experience declining prices.

Judging by low stock prices and high capital outflows, investors were already betting against high growth rates.

Around this time, Argentina s then President Nestor Kirchner was using price controls to keep food prices low.

Americans, in turn, must think about where the proper balance lies between aesthetics, community, and low prices.

These this artificially induced consumerism I think it's atrocious.

In each country, a number of prices are rigid, because sellers resist selling cheaper, as low productivity gains and wage defense by unions leave no margin for lower prices.

For China, this means respecting and enforcing intellectual property rights, allowing non Chinese firms to compete on an equal basis, and setting its currency at a fair level rather than one that is artificially low.

Commodity export prices are at record levels, global liquidity has been ample, and international interest rates have been low.

Strong economic performance reflects strong domestic demand in the US, owing to low borrowing costs and rising asset prices.

CAMBRIDGE Long term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities.

And low income economies are suffering from higher food and fuel prices, which feature heavily in households consumption baskets.

For others, low prices would be a tremendous buying opportunity, whose prospective return far exceeds returns from lending today.

As the stock markets tumbled in September 2008, the fund was able to buy more shares at low prices.

The continued high prices of food could strain the already low purchasing power of the chronically food insecure population.

So, how much room is left in the relationship between debt and economic performance for a country with low interest rates, low inflation, buoyant stock prices, and healthy prior growth?

Real estate rental yields and stock market payouts are low, and real estate and stock prices may well fall as much as or more than bond prices if interest rates spike.

The fact that the government is willing to buy in the future (and now) should raise prices today, because it reduces the possibility of low prices in a future fire sale.

It includes developing the services sector, funding the social safety net, liberalizing an antiquated residential permit system (hukou), reforming state owned enterprises, and ending financial repression on households by lifting artificially low interest rates on savings.

In some instances a graft can be an artificially manufactured device.

When the permit prices become large enough to have a significant effect on CO2 emissions, there will be political pressure to introduce tariffs on imports that offset the advantage of countries with low permit prices. Such offsetting tariffs would have to differ among products (being higher on more CO2 intensive products) and among countries (being higher for countries with low permit prices).

One oft heard justification for high asset prices is that real (inflation adjusted) long term interest rates are very low.

It also affects negatively the exchange rate by making it appreciate artificially.