An Economic Thought

And perhaps one that shows my ignorance on just what Ben Bernanke is thinking at any given time, but let me throw it out there nonetheless. And, BTW, forgive that this entry is very Ameri-centric.

Interest rates have been kept low for ages to "encourage economic growth." But, on the level of private citizens, the economy has been in the crapper for years, and now the word 'recession' is being bandied about.

Now, theoretically, high interest rates encourage saving, and low interest rates encourage borrowing and spending.

But, a private individual can only borrow so much before they've reached the point where they can't pay it back. Have we reached the point where we as a citizenry are tapped out, and lower interest rates are hurting the situation by giving us no way to build real assets?

Worse, have we reached a point where corporate and individual good are diametrically opposed. It is often to a corporation's benefit to borrow money, use it for development, and pay it back later rather than spend there own. This is especially true since bankruptcy laws are SO much more lenient for corporations than individuals. (Individuals can declare bankruptcy only once in a lifetime. Corporations can declare multiple times, with less obligation attached.)

But, individuals are rarely in a position where it's beneficial to borrow, spend, and pay back later.

Now, add on that many corporations are doing most of their investing overseas. In other words, the money they borrow here is not being spent here, and so is not enriching out economy as a whole. In that case, are lower interest rates actually hurting us by funneling resources out of our country faster?

After all, the last several years have proven that "business" can be doing well, while the population as a whole, the people, are doing very poorly.