Review & Outlook: The Zero Decade - WSJ.com
Bill Gross (PIMCO) made some good comments in Barron's 2012 Roundtable about the fallacy of the Fed's policy in terms of risk-based lending - i.e. with rates so low, banks don't want to lend. Why take the risk?
Much of Europe is showing what happens when governments believe they can borrow forever at low rates. Eventually the rates rise. Countries find they can't afford to pay the interest rates (we are only talking 7%) that bond buyers demand. The countries raise taxes and their economies start to fall apart.
Will this be the outcome. Or, will the central banks print, print, print and somehow all that money won't be chasing the same amount of goods?
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