Interest rates on government debt are still low.

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

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

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

But if the central bank reduces interest rates and credibly commits to keeping them low in the future, asset prices will rise.

Continued monetary easing via very low Federal Funds rates

Emerging market interest rate spreads now are abnormally low.

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

In the early to mid 1990 s, rates were kept low because of banks real estate problems.

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

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.

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

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

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

Low Japanese rates led to a search for yield by Japanese investors who increasingly invested their savings in foreign currencies, where they received higher interest rates the famous FX carry trade.

They were slashed again in 2001 and kept ultra low after the dot com bust.

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.

And lowering the rates that government pays has not translated into correspondingly lower interest rates for the many small firms struggling for financing.

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

As a result, even after output levels return to their potential, interest rates will stay low by the standards of the 1980's and the 1990's.

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

People are excited, and they are lining up to buy.

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

So far, the country has not experienced a debt crisis, and interest rates remain exceptionally low, at around 1 .

The Federal Reserve s policy of long term asset purchases, also known as quantitative easing, has intentionally kept long term rates low.

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

Policy would still be accommodative if the Fed maintained low interest rates rather than the zero level that was appropriate for a panic.

That compelled the Fed to keep interest rates at historic lows for an extended period, and rates were raised only gradually because of fears about the recovery s fragility.

The ECB has done all it can for growth by giving Europe a prolonged period of monetary stability at record low interest rates.

During the mid to late 1990s, Ford continued to sell large numbers of vehicles, in a booming American economy with a soaring stock market and low fuel prices.

Large firms are awash with cash, and lowering interest rates slightly won t make much difference to them. And lowering the rates that government pays has not translated into correspondingly lower interest rates for the many small firms struggling for financing.

This bonanza has largely been the result of an extraordinarily positive international environment. Commodity export prices are at record levels, global liquidity has been ample, and international interest rates have been low.

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

History suggests that interest rates will not remain at record low levels indefinitely, and that when change comes, it might be abrupt.

Moreover, because profits are high in Europe, likely future increases in real interest rates needed to ensure price stability easily can be financed out of profits without economic disruption. The truth of the matter is that interest rates both nominal and real are too low in Europe, not too high.

But the ECB has signaled that big interest rate cuts are unlikely as long as the German economy remains strong, with relatively low unemployment.

Although long term government interest rates are now very low, they are beginning to rise in response to the outlook for a sharply rising national debt.

The US Federal Reserve promised to hold down longer term rates, but its commitments in that direction now seem ineffective.

But, given that overinvestment in the 1990 s was part of the problem underpinning the recession, lower interest rates did not stimulate much investment.

Recently, the Fed expressed its intent to keep policy rates low for a long time until employment picks up strongly.

The survivors of the plague found not only that the prices of food were cheaper but also found that lands were more abundant, and that most of them inherited property from their dead relatives.

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.

To date, neither the surge in oil prices nor the steep price increases in other commodities have triggered significant second round effects on prices in the developed economies, where inflation rates, albeit rising, remained relatively low in 2004.

Global stock markets have, overall, reached new highs. And credit markets show low spreads, while long term bond yields have fallen in most advanced economies.

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).