How much do you know about financial independence?

It would hurt business and the government too.

and yet it punishes people for saving. Low interest rates give no incentive to save money and yet protects people who spend much more than they should. I look forward to an increase in the interest rates.

The days of 14% on a term deposit are long gone.

Can't raise interest rates when consumer lending fell $2.2B in July to $17.7B. That's credit cards, lines o credit and auto loans. Banks gotta make bank yo!

Just blows my mind that people keep spending money they don't have.

Bring it on.

and yet it punishes people for saving. Low interest rates give no incentive to save money and yet protects people who spend much more than they should. I look forward to an increase in the interest rates.

that saying is parroted enough that people believe it but the people who don't save when %rates are low would be the same people who never save any money when the rates are high

its just costing them less right now but the rent always comes due

If you save a buck even at low/no interest rates … you still got that buck

that saying is parroted enough that people believe it but the people who don't save when %rates are low would be the same people who never save any money when the rates are high

its just costing them less right now but the rent always comes due

If you save a buck even at low/no interest rates … you still got that buck

Sorry, but you are way off base here. It's parroted because savings should, and historically have, form the basis of investment in an economy. But money is being made out of thin air these days and speaking of the rent always coming due… you just wait to see the outcome of that.

Your view that savers will always save and non savers will always spend is simplistic. Interest rates set the floor for non speculative returns. Historical average interest rates do not encourage Joe average to save up for a holiday, but they do provide income for retirees. And at zero interest rates, there is zero option for non speculative income. This forces retirees to put their money into speculative assets (stock market and real estate), which is exactly why we have a global stock and real estate bubble. And yes, it encourages borrowing to speculate on these assets, and totally punishes savers who just want to sit on their cash, which is why debt is out of control.

And finally, if you save a buck at low/no interest rate, you certainly won't have that buck a year down the road. Inflation will take care of that for you. And if you think the published inflation rates are even remotely reflective of the decline in purchasing power you clearly aren't paying rent, buying houses, buying a phone plan, paying utilities, paying property taxes or eating food from either restaurants or grocery stores. Sure, if the only thing you spend your money on is computer chips I guess your costs are decreasing. Other than that, all the other items mentioned are up way more than 5% on the last 12 months. So your buck that you get 0.15% interest on in your savings account is now worth 95.015c if you're lucky.

This is not going to end well. It's a miracle it's gone on this long, and it could go on for a while yet, but at some point it will all end in tears, and interest rates will be forced upwards when countries can no longer sell their treasuries and bonds because they are insolvent due to unmanageable debt. If it wasn't for the US$ being the global reserve currency, they'd already be there, since they are more broke than Puerto Rico and Greece, but no-one wants to admit it yet; especially China who holds 1.27 trillion in US treasuries.

Interest rates will rise at some point, but it will be in spite of the efforts of the fed, rather than directly because of them.

Sorry, but you are way off base here. It's parroted because savings should, and historically have, form the basis of investment in an economy. But money is being made out of thin air these days and speaking of the rent always coming due… you just wait to see the outcome of that.

Your view that savers will always save and non savers will always spend is simplistic. Interest rates set the floor for non speculative returns. Historical average interest rates do not encourage Joe average to save up for a holiday, but they do provide income for retirees. And at zero interest rates, there is zero option for non speculative income. This forces retirees to put their money into speculative assets (stock market and real estate), which is exactly why we have a global stock and real estate bubble. And yes, it encourages borrowing to speculate on these assets, and totally punishes savers who just want to sit on their cash, which is why debt is out of control.

And finally, if you save a buck at low/no interest rate, you certainly won't have that buck a year down the road. .

there have always been people who live comfortably all their lives on modest amounts of income and there are always people who somehow manage to piss it all away

well if you just spent the buck you got nothing, if you saved the buck you got maybe not a buck but you got something a year down the road, maybe just staying even is where its at right now? I've adjusted my attitude to that idea, but sooner or later you gotta own something which is the advice given to me by the smartest ditch digger I know as we were riding the chair and his advice was spot on

I think its greed that forces smart people to take big chances

If you can't pay cash, you can't have it.

you can have it but that is not the same as owning it

If you can't pay cash, you can't have it.

No houses for anyone.

there have always been people who live comfortably all their lives on modest amounts of income and there are always people who somehow manage to piss it all away

That's very true, but not very relevant. On the topic of whether interest rates encourage or discourage savings, as I said this is very simplistic. You're relating to one notion of saving while ignoring the bigger and more important part of saving. So maybe let us change the word 'saving' to the idea of making real earned cash from one person available for another person to use it for investing in capital to create production. This is how economies are supposed to work. Not from quantitative easing, or lending money that doesn't exist with historically out of whack fractional reserves that leave them excessively vulnerable to a run.

sooner or later you gotta own something which is the advice given to me by the smartest ditch digger I know as we were riding the chair and his advice was spot on

That's not unreasonable advice, and it probably appears to be the only advice one should take in the last decade because things are so out of whack. But in the past there was money to be made by making your money available (through interest earning savings, bonds, treasuries etc), so that others could use it for capital investment. When every person's hand is forced by what amounts to negative yield (once inflation is accounted for, and not even accounting for inflation in many places such as Japan and Germany were rates actually are negative), to move their investments from cash equivalents into riskier assets, you get asset bubbles like we are experiencing now.

I think its greed that forces smart people to take big chances

Yes, greed exists. Given the right circumstances virtually everyone falls prey to it. But the real issue here is that people are not given a choice. Let's say your over 65, and face it; that's who a large amount of the cash belongs to because they've had a lifetime to accumulate it (I certainly hope I have more by then, as does everyone). You need to get returns on your money to survive. You used to get yield in safe investments. In which case you had 'savings' in cash equivalents. Drop yield to zero and those evaporate as money is driven into other assets. No more 'savings'. No more money for capital investments, so it must come for quantitative easing or unprecedented fractional reserve lending ratios. This totally distorts asset prices. This is cut and dried 'no interest punishes savers and favors risk taking'.

Interest rates may not encourage you or me to save a few bucks here or there to earn an extra 4% on $1000, but you take yield away from cash equivalents and you get billions or trillions moving out of that investment class and into hard assets forming bubbles that with 100% certainty will explode at some point. There's only one end game to this and the longer it goes on the more devastating it will be.

If you can't pay cash, you can't have it.

I didn't realize you'd paid cash for your home.

Baller.