Finance & Fury Podcast

For the last few weeks we have been talking a lot about the economy; the Reserve Bank, printing money, and now we will be finishing off by talking about the final effect of this – Interest Rates. Today, we ask the question; Are low interest rates actually a good thing? Well, I guess it depends on who you’re asking… The Economy as a whole e.g. Business The population – you and I Retirees – Low rates don’t look so good – they’re trying to save money in cash to live their lives out. But they’re not really getting ahead when accounting for inflation – the real return on money is close to zero. They’re actually going backwards Younger people – it’s great for borrowing because it’s cheap to do so. But in the long run it’s not so good for affordability. As people borrow more money, they can artificially afford to buy more…affordability over all isn’t as good, so the real value of money decreases. Interest rates Nixon in 1971 – Ended the Bretton Woods system and the last days of currency being tied to gold.