If you mess with interest rates you’re messing with the entire economy. From Doug Casey at internationalman.com:
International Man: Interest rates are simply the price of money.
They have an enormous impact on banks, the real estate market, and the auto industry. It’s hard to think of a business that interest rates don’t affect in some meaningful way, either directly or indirectly.
That’s why interest rate expert James Grant correctly describes interest rates as the most important price in all of capitalism.
What’s your take?
Doug Casey: It’s absolutely true: the price of money—of capital—is the most important of all prices. Among other things, interest rates help determine whether people prefer to be debtors or savers. That makes a huge difference for a society because when you’re a debtor, you are either mortgaging your future earnings or consuming the capital that other people have saved in the past. Of course, debt can also finance businesses and facilitate production—but most debt today, including almost all government debt, is for consumption, not production. Debt is generally dangerous and often very destructive. Low-interest rates encourage debt.