Interest rates are not sustainable if higher than GDP growth?

crgarcia · Oct 7, 2009

When interest rates are higher than GDP growth, most people won't be able to pay their debts?

How can people pay high interests from economic activity, if the economy just doesn't grow that much?

This makes a casino-economy where most people come to "play" (by getting debt), yet only a few will profit in the long run.
Most will lose, ending up with less than they started with?

Martinghoul · Oct 7, 2009

What about inflation? You might want to look at the Taylor Rule, it'll be educational.

crgarcia · Oct 7, 2009

Quote from Martinghoul:

What about inflation? You might want to look at the Taylor Rule, it'll be educational.

Inflation would be included in GDP growth (unless GDP is compensated for inflation).

Billy Thunder · Oct 7, 2009

Go to your local public university, get the syllabus for macroeconomics and statistics and buy the required text's and learn this shit.

Daal · Oct 7, 2009

"In the long-run the return of financing GDP cannot be higher than the return of GDP" - Bill Gross

crgarcia · Oct 7, 2009

Quote from Daal:

"In the long-run the return of financing GDP cannot be higher than the return of GDP" - Bill Gross

Great quote.

This proves it.

sahtt · Oct 7, 2009

If you fully understand the terms it's intuitive. If a nation/person borrows at a greater rate than their income/wealth increases it's not sustainable.

Martinghoul · Oct 8, 2009

Quote from crgarcia:

Inflation would be included in GDP growth (unless GDP is compensated for inflation).

So you're talking about nominal, rather than real GDP.

Taylor Rule, check it out...

crgarcia · Oct 8, 2009

Quote from sahtt:

If you fully understand the terms it's intuitive. If a nation/person borrows at a greater rate than their income/wealth increases it's not sustainable.

So, where is the American gov't and its citizens going?
:eek: