Low Interest Rates ‒ Good Idea Gone Bad


    Extremely low interest rates lead to businesses and individuals that don’t want to spend, banks that don’t want to lend (except to governments), and massive government spending and rising debt levels that imperils all of us, all of which detracts from economic recovery and growth, says Peter Jarvis, executive director, Toronto CFA Society. Writing in the January 2012 ‘AlternativChronicle’ (http://www.alternativchronicle.com/201201.html), he says the basic theory is that low interest rates encourage risk taking, capital investment, and business development. However, while the underlying assumptions reflect conventional wisdom, “a growing body of evidence” says what started off as a good idea, when taken to extreme, can turn bad.