Re: Here yah go: long term interest rates

["Ric Holt" <rholt@xxxxxxx>]

 A Colleague and I are working on an empirical paper where we look at the relationship between Federal Reserve policies and the impact on real long term interest rates since the 1950s. Guess what, the correlation is very significant  for all periods, while the rate of savings on long term interests is not. We will be presenting our paper at the EEA meeting in Boston next March.
-Ric Holt


At 06:23 PM 9/25/01 -0400, you wrote:
>Deficit spending has to be financed somehow and that is via issuance of
>bonds to the general public.  This creates a vacuum in which private savings
>are ciphoned out of the money market from where businesses typically borrow.
>Since there is less savings to be borrowed by firms, the price of money
>(i.e. the interest rate) goes up, which makes it more expensive for firms to
>finance capital expenditures.