Interest rates are already low.

The Long Mystery of Low Interest Rates

Do Low Interest Rates Ensure High Asset Prices?

Interest rates on government debt are still low.

Low interest rates did not cause the bubbles.

Ultra low interest rates may persist for some time.

Back then, Europeans complained that low interest rates in America were driving global inflation now low US interest rates are blamed for driving irresponsible asset price booms.

In an environment of ultra low interest rates, the economic cost of being late is low.

Keeping interest rates low discouraged capital inflows and encouraged asset price inflation.

Low interest rates strengthen the ability to pay, and thus boost demand.

The world s major industrial economies, meanwhile, are maintaining very low interest rates.

Moreover, low long term interest rates are a thing of the past.

Policymakers initially resorted to government spending and low interest rates to boost demand.

Government debt service has in general become easier, owing to low interest rates.

We know that extremely low real interest rates produce massive expansion of credit.

When other countries guarantee repayment, it is hoped, low interest rates will return.

Current low interest rates do not cover the risk that banks would take.

Japan s slow growth and low interest rates over the past two decades are emblematic.

Reckless budget deficits can lead to a weak currency so can low interest rates.

However, in the Fed s defense, low interest rates were needed to maintain the expansion.

Macroeconomic policy can try to compensate through deficit spending and very low interest rates.

Another interpretation is that awash with liquidity merely means that interest rates are low.

But interest rates on US Treasury securities are very low and are not rising.

Countries with European style growth rates could handle debt obligations of 60 of GDP when interest rates were low. But, with debts in many countries rising to 80 or 90 of GDP, and with today s low interest rates clearly a temporary phenomenon, trouble is brewing.

Current ultra low interest rates may be scaring people about the adequacy of future income.

But in the case of Japan, military spending is already low, as are interest rates.

Given today s exceptionally low long term interest rates, the annual cost would be, well, peanuts.

As long as interest rates remain low, there is no downward pressure on public investment.

However, over time these ultra low interest rates have promoted a highly speculative financial carry trade speculators borrow yen at low interest rates and then buy dollars and other currencies that are invested in higher yield assets elsewhere.

Similarly, a potential downside to quantitative easing is that low interest rates send capital to higher growth, high interest rate countries.

Short term interest rates, most macroeconomists would say, could always be set low enough to generate reasonable rates of employment and demand.

Rather than spurring investment in plant and equipment, low interest rates inflated a real estate bubble.

And the Fund has assisted low income countries with large loans at unprecedented zero interest rates.

If interest rates are low, we can attract a great deal of money from the public.

Alternatively, low interest rates could push her (or her pension fund) to buy risky long maturity bonds.

The US is not the only country with very low or negative real long term interest rates.

This could be achieved by monetary and fiscal policy low interest rates and large state investment programs.

Low interest rates mean that the additional debt burdens that public borrowing will create can remain manageable.

This implies that interest rates may, in fact, need to stay low for a very considerable period.

But European companies remain hesitant, despite low interest rates, keeping private investment well below its previous peak.

This enabled US banks to profit by offering low rates of return to foreign lenders while forcing foreign borrowers to accept high interest rates.

In this case, it is entirely possible to have very low interest rates co exist with strong growth.

World monetary conditions seem to point to a protracted period of high liquidity and low international interest rates.

But the bad news is that even if interest rates are expected to remain low for a while, they will not stay this low indefinitely.

Investors are buying long term bonds at the current low interest rates because the interest rate on short term investments is now close to zero.