From the Journal of Economic Issues, "The Natural Rate of Interest is Zero"
This paper describes how the natural rate of interest is zero, how the government can let this natural rate happen, and how it can fix the massive debt problem we are in today.
While the paper makes great sense, I do not believe the economy is willing to pay the price of fixing our debt problem. The "fix" points to a long spread of depreciation, much like, if not the same as, Japan. But is depreciation necessarily a bad thing? If you look at the s&p 500, the market has continually been on the rise. Sure, we have had cycles of depreciation, but is it plausible to never depreciate on a greater scale?
Here's the link:
http://moslereconomics.com/wp-content/graphs/2009/07/natural-rate-is-zero.PDF
Saturday, December 5, 2009
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